“We want to accelerate France’s debt reduction,” said Economics Minister Bruno Le Maire at a press conference, for which his country is jeopardizing its “credibility in Europe”.
Inflation was 5.2% yoy in 2022 and although it was estimated at 4.2% for the year to date, it is now forecast at 4.9% amid concerns over food prices.
These prospects appear in the Stability Program that European Union (EU) countries send each year to the European Commission, which oversees them.
The European Stability and Growth Pact limits the public deficit to 3% of GDP and public debt to 60%, although the reform of these rules is in full swing.
Debt levels in EU countries skyrocketed after the 2008 financial crisis and again with the 2020 pandemic. In France, it was 111.6% at the end of 2022.
The government plans to cut it to 108.3% in 2023, but the public deficit would widen to 4.9% this year from 4.7% in 2022. The aim is to reduce it to 2.7% by 2027.
After investing billions of euros to sustain homes and businesses during the Covid-19 pandemic, the EU’s second-largest economy is now calling for “cutting back” on public spending.
“We have just asked our compatriots to make an effort with the pension reform,” “it’s fair that they are doing it too [le] Ask public actors,” Le Maire said.
The government also forecasts a gradual acceleration in economic growth to 1.6% of GDP in 2024 and 1.8% in 2027 after expansion slowed to 1% this year.