They were expected at the turning point, the day after the presentation of the executive’s economic roadmap. Antoine Armand, Minister of Economy and Finance, and Laurent Saint-Martin, Minister responsible for Budget and Public Accounts, denied having presented an “austerity” budget for 2025, despite the massive spending cuts planned. Both were heard by the National Assembly’s finance committee on Friday morning.
Michel Barnier’s government detailed its budget proposal for next year on Thursday, explaining that it intends to find “60 billion euros” of savings, an unprecedented figure under the Fifth Republic, in financial laws (PLF) and in the financing of social security (PLFSS) which will be the subject of fierce debate in the National Assembly where it is in the minority.
“It will increase spending on Social Security as a whole”
“When we talk about austerity (…), I think we need to take a step back,” declared Antoine Armand in particular. Although spending cuts of 41.3 billion euros are planned in the PLF and PLFSS to restore public finances, spending will continue to grow next year, albeit at a slower pace, he stressed.
“The prime minister announced an early revaluation of the minimum wage to 2% starting from November 1” and “all benefits will be revalued” next year, but with a six-month postponement for pensions, Antoine Armand insisted . He also pointed out that the 2% increase in income tax brackets would allow nearly 530,000 families to remain outside the scope of this taxation.
“Expenditures for all social security, all branches together, will increase (…) in 2025”, also argued his colleague responsible for the budget. “This is not what austerity is,” he insisted.
These texts also foresee 19.3 billion euros in tax increases, bringing the total desired effort to 60.6 billion euros to reduce the public deficit to 5% of GDP, compared to 6.1% in 2024, with growth expected at 1.1% like this year.
Antoine Armand also believes that the Supreme Council of Public Finances (HCFP) was “a little overly critical” by judging the government’s forecasts to be “fragile” in an opinion published on Thursday.
The Budget Minister, Laurent Saint-Martin, for his part, warned deputies against “a somewhat Pavlovian reading” of the budget, which would suggest that “an increasing budget is positive; a decreasing budget is bad.” “Why must we systematically consider that a good ministerial budget is a systematically growing budget? Shouldn’t we have the discipline to deal with real needs and their developments? “, he asked.
The 60 billion euros of savings, the “red line” of the debates in Parliament
For their part, the oppositions have criticized the government’s road map, starting with the left which still considers it “austerity”. In particular, he sharply criticized the energy tax or the reduction of jobs in the national education sector. For the RN, which sees the postponement of the pension revaluation as a “theft”, the PLF lacks a “break” after 50 years of “mismanagement”. On the contrary, the MoDem, the government’s partner, said it was ready to “give the text a chance”.
Ministers reiterated that they were open to dialogue with Parliament to amend the PLF and PLFSS during the debates. With, however, “a single red line”, insisted Laurent Saint-Martin: that the effort reach 60 billion euros in 2025 to begin reducing French debt, for which interest payments risk becoming the first budget item in 2027.
The government will propose with an amendment 5 billion in savings for the ministries, which will not concern the ministries subject to the planning law. But also an increase in the tax on airline tickets which will also include private jets in its scope, said the Budget Minister, the amount of which is still under discussion. Another proposal was announced, that of “strengthening the Justice budget” like that of the Interior.
“Be responsible in a serious situation”
Guest on RTL this Friday morning, shortly before his hearing, Laurent Saint-Martin had already reiterated that “a balanced budget is necessary to be able to be responsible in a serious situation”. “Faced with the deficit which continues to reduce, we must take measures”, also supported Antoine Armand, invited for his part on France 2deploring a debt of “more than 3,000 billion euros, which places us among the most indebted countries in Europe”.
He also assured that the government has taken into account, in drawing up the 2025 budget, the “careful look” that the rating agencies are directing at the country, while Fitch will present on Friday its diagnosis on the French economy, which could lead to a status quo or a downgrade of its rating.
With a roadmap focused on reducing the number of public employees, of which 4,000 professor positions have been eliminated, and an increase in taxes for large companies and the richest, the executive hopes to be able to restore public finances. Despite the reluctance especially of former Macronist ministers, Prime Minister Michel Barnier wants to “prevent a crisis whose first victims would be the weakest among us”, his spokesman said.
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