French economic growth will be less vigorous than expected in 2024, with a forecast reduced to 1%, the Minister of the Economy announced this Sunday, February 18 on TF1. Bruno Le Maire also revealed 10 billion in “immediate” savings to meet the deficit reduction ambitions. These will relate in particular to the current expenditure of ministries, development aid and the “MaPrimeRénov'” thermal renovation system.
This planed growth forecast “takes into account the new geopolitical context”, explained the Minister of the Economy, referring to the war in Ukraine, the Middle East, the “very marked economic slowdown in China” and “a recession in 2023 in Germany”.
Faced with tax revenues lower than expected and to respect its budgetary objectives of a public deficit of 4.4% of GDP in 2024 (compared to 4.9% anticipated for 2023), the State will make “an immediate effort to 10 billion euros in savings,” explained Bruno Le Maire. “It’s not Social Security that we’re going to touch, it’s not the local communities that we’re going to touch,” he insisted.
The economies should not require a new law, but “we also keep the possibility” of an “amending budget in the summer depending on economic circumstances and depending on the geopolitical situation, in particular the evolution of the war in Ukraine”, also noted the minister.
“Savings on the backs of the most vulnerable”
Half of the savings, or five billion euros, will have to be found in the operating budget “of all ministries”, continued the tenant of Bercy. For example on energy costs or purchases. The government will also “reduce public development aid by almost a billion euros” and lower the MaPrimeRénov’ energy renovation aid envelope by another billion euros. “We had announced an additional envelope of 1.6 billion from 2023 to 2024” and “there will always be an increase of 600 million, but we are recovering 1 billion,” noted the minister.
A “third series of savings”, worth a billion euros in total, will concern “State operators”. Bruno Le Maire mentioned in particular the National Agency for Territorial Cohesion, Business France, France Compétences and the National Center for Space Studies.
The minister “chose injustice”, reacted Anne Bringault, director of programs at the Climate Action Network, denouncing “savings at the expense of the most vulnerable”, on public development aid and support for thermal renovation. “The climate and purchasing power will be the losers,” she says.
The increase in the envelope devoted to the ecological transition is reduced from 10 billion to 8.6 billion, Minister Christophe Béchu said in a press release, praising “an unprecedented increase” in his budget. The increase in the Green Fund “initially planned at 500 million euros, will be limited to 100 million euros”, said his office.
“We will not raise taxes”
After 0.9% growth in 2023, the government had previously forecast a 1.4% increase in GDP this year. It now aligns with the estimates of other institutions: the Banque de France expects growth “close to 0.9%”, the International Monetary Fund forecasts 1% and the OECD 0.6%. However, it is on this prospect of a more vigorous economy that the budget for the current year is based.
Because rather than tax increases, the executive was counting on a surplus of activity as well as considerable savings to reduce a debt of more than 3,000 billion euros, with the prospect of bringing the deficit below the European limit of 3% in 2027.
“We will not increase taxes,” insisted Bruno Le Maire, and “we will maintain the tax cut” announced for the middle classes. “The savings announced will allow us to maintain our debt reduction trajectory,” reacted Jean-René Cazeneuve, general budget rapporteur to the National Assembly.