France’s Finance Minister Antoine Armand stated that the government’s budget for 2025 includes 60 billion euros ($65.68 billion) in spending cuts and tax increases to address the country’s growing debt burden. The aim is to reduce the fiscal deficit from 6.1 percent to 5 percent of GDP by next year, with a further target of meeting the European Union’s 3 percent limit by 2029.
The national debt is expected to reach nearly 115 percent of GDP in 2025, with interest payments surpassing defense and education expenditures. Armand emphasized the need to take action to regain control over the debt and deficits, stating, “Facing a spiraling deficit, we must act and that is exactly why we presented yesterday a recovery budget.”
Prime Minister Michel Barnier’s administration plans to target large companies with a temporary surtax and individuals earning over a quarter of a million euros per year. Additionally, all taxpayers will be affected by the restoration of a levy on electricity consumption.
However, analysts have expressed doubts about the government’s ability to meet its deficit reduction targets. Goldman Sachs analysts raised concerns about the proposed consolidation and reliance on tax increases, while JPMorgan economist Raphael Brun-Alguerre predicted a shortfall in economic growth.
The announcement comes at a challenging time for France politically, with President Emmanuel Macron’s party losing its majority in a recent parliamentary election. The government will need to navigate opposition parties’ concerns and potential veto of the budget bill.
Overall, the budget measures aim to address France’s fiscal challenges and stabilize the economy amidst growing uncertainty and political shifts.
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