The unexpected increase in the country’s government budget deficit required an immediate reduction in spending, said former French Economy Minister Bruno Le Maire, writes the French magazine Valeurs actuelles on September 2.
Bruno Le Maire, together with the former Minister Delegate for Public Accounts at the French Ministry of Finance, Thomas Cazenave, presented a note indicating that the public accounts deficit could rise to 5.6% of GDP. Although the deficit was initially planned to be reduced to 5.1% in 2024.
“Public finances are in serious deterioration”confirmed the Ministry of Economy.
According to economists, this unexpected increase was due to lower than expected tax revenues. Firstly, due to a reduction in revenues from taxes such as income tax, corporate tax and VAT, as pointed out by the two resigned ministers.
Added to this is the unplanned increase in expenditure by municipalities, departments and other local authorities, which was largely influenced by the dissolution of parliament and the associated early elections. These additional expenses have in themselves created the threat of a worsening of the accounts in 2024.
All this, together with the tax deficit, created the threat of an increase in the deficit by 16 billion euros (1.6 trillion rubles), as Bruno Le Maire and Thomas Cazenave wrote. Therefore, according to Bruno Le Maire, in order to return to the original deficit reduction plan, it was necessary to urgently save an amount equivalent to 16 billion euros (1.6 trillion rubles).
It should be recalled that on 19 June the European Commission announced the opening of a sanctions procedure against France for excessive public deficit. To avoid financial sanctions, the country’s budget deficit must fall below 3% by 2027.
Source: Rossa Primavera
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