2024-09-09 23:42:23
OR french government asked the European Commission to extend the deadline for the submission of its plan for the reduction of the public deficitthe Ministry of Finance announced on Sunday, confirming a report by the newspaper La Tribune Dimanche.
France has asked for additional time to ensure consistency between the plan and its 2025 budget bill, Bloomberg reports. The plan had to be submitted by September 20.
The president Emmanuel Macron appointed Michel Barnier as the new prime minister of France on September 5.
Barnier’s most urgent priority will be a 2025 budget bill, which must be submitted to parliament for debate by October 1. The new prime minister will first have to find a new finance minister to replace Bruno Le Maire, who has said he will not stay on.
The EU had asked France and six other countries to send a longer-term fiscal strategy to Brussels in September.
EU rules include tough measures for countries with debt of more than 60% of gross domestic product and a budget deficit of more than 3%. France’s deficit was 5.5% last year, with debt at around 111% of GDP.
A spokesman for the finance ministry told La Tribune newspaper that “France has requested such an extension”, without specifying its duration.
The transitional provisions of the new European rules adopted in April provide for the possibility to “extend this September 20 deadline for a reasonable period if the Member State and the Commission agree”.
The European Union has launched deficit proceedings against France, Italy, Belgium, Malta, Poland, Slovakia and Hungary. As of 2020, related proceedings against Romania are also pending.
The objective of the excessive deficit procedure is to persuade states to implement sound fiscal management. In theory, fines of billions of euros could be imposed by the Commission if these states do not bring the deficit below 3% of GDP.
Increasing the deficit
For the record, the plan communicated by Paris to Brussels a year ago projected a deficit of 4.4% in 2024. To reach the 3% target by 2027, France must find 100 billion euros, a goal that seems inaccessible. “If we look at the budget that Barnier is inheriting and the fiscal trajectory of France, the future is rather bleak,” notes Sander Torduard, a budget expert and chief economist at the Center for European Reform think tank.
“If action is not taken, there is no doubt that France will break the new fiscal rules and will not respect the excessive deficit procedure.” Indeed, the entire European agenda depends on solving the difficult French equation. “Brussels needs proof of France’s future fiscal consolidation,” says the French economist.
Barnier’s experience
To break the deadlock, France’s new Prime Minister will have to use all the advantages he has: the experience and credibility he gained as a Brexit negotiator.
“There is no doubt about Barnier’s ability to negotiate effectively with the Commission and the other members of the Council,” assures Torduar. In fact, he’s probably one of the best for it.
In this race against time, it could help France that Germany is also entering election season. There are rumors in Brussels that the Commission will wait until after the German federal elections in September 2025 to initiate any procedures before presenting the EU’s new multiannual budget plan from 2028 to 2034.
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