Brussels gives Paris the green light. The finance ministers of the European Union, meeting this Tuesday, January 21, formally validated France’s budgetary plan, despite a smaller reduction in the public deficit in 2025 compared to the initial project. This green light was expected after the positive opinion already given by the European Commission.
In total, the multi-annual budgetary trajectories of 21 EU member countries were approved on Tuesday. The plans of the other six countries, including Germany, are behind schedule and will need to be evaluated later.
France estimates that its deficit will have reached 6.1% of gross domestic product (GDP) in 2024, well above the 3% limit authorized by European budgetary rules. The government of new Prime Minister François Bayrou announced “significant savings” in order to reduce this indicator to 5.4% in 2025, with the objective of returning below the ceiling of 3% in 2029. For this year, the target is less ambitious than that of the previous French government of Michel Barnier which aimed for 5%. But Paris is therefore committed to increasing the effort afterwards to get back on track in four years.
The worst public deficit ratio in the EU
France “maintains overall the level of ambition over the adjustment period”, welcomed the Commissioner for the Economy, Valdis Dombrovskis, during a press conference.
“It is a budget which will require efforts from everyone, but we must do so in the interest of the country,” French Finance Minister Eric Lombard told the press after the meeting, thanking his European counterparts for their support and Valdis Dombrovskis for his “remarkable work”.
France displays for 2024 the worst public deficit ratio of the Twenty-Seven with the exception of Romania. It also has the third highest debt ratio behind Greece and Italy. At the end of September, French public debt reached 113.7% of GDP at 3,303 billion euros.
Since last summer, France has been part of a group of eight countries in excessive deficit procedure, with Belgium, Hungary, Italy, Malta, Poland, Romania and Slovakia. These countries must take corrective measures to comply with EU budgetary rules in the future, or face fines.