French PM warns of serious budget crisis ahead of 2025 plan
- Prime Minister Michel Barnier stated that France's budgetary situation is 'very serious' and requires a deeper understanding of public finances.
- The Bank of France warned that a return to EU deficit rules by 2027 is unrealistic, with projected public deficits exceeding EU limits.
- Barnier's administration faces significant challenges, including the potential for tax increases, as it prepares to submit the 2025 budget.
On September 18, Prime Minister Michel Barnier expressed grave concerns regarding France's budgetary situation, describing it as 'very serious.' He emphasized the need for a thorough understanding of the country's public finances, especially in light of France's recent placement under a formal procedure for violating EU budgetary rules. This situation arose before Barnier took office, highlighting the urgency of addressing the fiscal challenges ahead. The Bank of France has indicated that the anticipated return to EU deficit rules by 2027 is unrealistic, with the public deficit projected to reach approximately 5.6% of GDP this year and exceed 6% by 2025. These figures starkly contrast with the EU's 3% ceiling on deficits, raising alarms about the sustainability of France's financial practices. In response to these challenges, Barnier has suggested the possibility of tax increases as a means to stabilize the country's finances, a move that President Emmanuel Macron has previously ruled out during his presidency. This proposal reflects the difficult choices facing the new administration as it seeks to navigate the complex fiscal landscape. As Barnier prepares to submit a 2025 budget to parliament next month, this will serve as a critical test for his government. The emphasis on responsible action over mere rhetoric underscores the seriousness of the situation and the need for effective measures to restore fiscal stability in France.