2024-02-18 19:27:51
The moment of truth has come. Invited this Sunday evening on the TF1 television news, the Minister of Economy and Finance, Bruno Le Maire, revealed the new growth figure expected by the government for France in 2024. He is now counting on an increase of 1 % of GDP this year, far from the 1.4% predicted so far.
For the government, it became urgent to correct the situation. “The sooner we are sincere, the better,” admitted a government advisor before the weekend while international institutions have all revised downwards their growth forecasts for France in recent times. After the International Monetary Fund went from 1.3% to 1%, the European Commission downgraded its target by 0.3 points last week to bring it down to 0.9%, a figure similar to that envisaged by the Bank of France. More pessimistic, the OECD is only expecting an increase of 0.6% in GDP this year in France.
Deficit target maintained at 4.4% of GDP
In fact, since the second half of 2023, economic activity in France has stagnated. However, France started the year 2024 with growth gains limited to 0.1%. And the next few months look gloomy. “The French economy is holding up better than the economies of other developed countries”, nevertheless underlined Bruno Le Maire, justifying the revision by “the new geopolitical context” and “growth which is slowing down almost everywhere in the world with significant revisions in United Kingdom, Germany and even more in China.
The revision of French ambitions seriously complicates the Bercy equation. “Less growth means less tax revenue,” he insists. Already faced with a 2023 financial year which went less well than expected, the Minister of the Economy does not call into question the objective of restoring public finances this year by reducing the deficit to 4.4% of GDP. But the step will be a little higher. This is especially true as the bill has increased in recent days with new aid promised to farmers, construction companies, etc.
To keep the roadmap, Bruno Le Maire confirmed this Sunday the launch of a savings plan, to the tune of 10 billion euros starting this year as revealed by “Les Echos” at the beginning of February. These will be carried out exclusively by the State. ” The way […] courage and responsibility,” he pleaded, rejecting in passing the “easy way out” which would have been that of tax increases.
Cancellation of credits
In detail, via two decrees which will be taken in the coming days, credit cancellations amounting to 5 billion euros will be initiated in all ministries, while the other 5 billion savings will be found in public policies. . Among others, State operators – France Compétence, Business France, the National Agency for Territorial Cohesion, CNES, etc. – will be contributed to the tune of 1 billion euros. Furthermore, public development aid will be reduced by 800 million euros. Finally, the amounts allocated to MaPrimRenov’ will increase from 3.5 billion euros in 2023 to 4 billion this year, instead of the 5 billion initially envisaged.
The score is complicated. Bruno Le Maire must act quickly as in the spring, the rating agencies will be called upon to deliver a new verdict on French debt. In any case, it is a file that gives the executive a cold sweat. A deterioration of the French rating just before the European elections next June would have the worst effect.
For several days, the host of Bercy had been preparing people’s minds for this degradation. “After Covid, the recovery, the end of inflation, our subject now, underlines a minister, is to find healthy finances, otherwise go into the wall. The hardest part is ahead of us. »
After the European elections
The government, after several summit meetings in recent days at the Elysée as well as at Matignon between Prime Minister Gabriel Attal and Bruno Le Maire, has for the moment decided not to go through a budgetary collective. “I am keeping the possibility of an amending finance bill next summer depending on the economic situation and the evolution of interest rates,” nevertheless indicated the host of Bercy. Or after the European elections.
The question was discussed during the first seminar of the entire Attal government. After a long presentation by Bruno Le Maire of a situation less good than expected, the Minister of the Interior Gérald Darmanin warned against the political risks of a collective budget, with an inevitable 49.3 at stake and a motion to extremely dangerous censorship. “We must not give the opposition the right excuse to make us take the motorway exit, they are just waiting for that,” reports a government heavyweight.
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