It's Budget Time Again: France Projected Deficit of 5-5.5% for 2025
In the City of Lights
Navigating the complex tasks of the incoming French Administration
With the declaration of France's new government looming just a week away, Finance Minister Éric Lombard and Budget Minister Amélie de Montchalin have dived headfirst into the development of a fresh budget bill. Their task is a tricky one, following the fall of the Michel Barnier administration over a no-confidence vote related to the budget back in early December. As a consequence, France lacked a 2025 budget plan, so the new government had to continue with the 2024 budget guidelines by decree at the end of last year. Their goal now is to finalize the new budget by February.
With some valuable insights into the inner workings of this budgetary endeavor:
The Nitty-Gritty
- Total Spending: The projected total budgetary expenditure for France in 2025 hovers around the €844 billion mark.
- Growth Outlook: The 2025 growth forecast has taken a downward turn to 0.7%, reflecting economic uncertainties and trade tensions.
Fiscal Measures
- The Rich Get Taxed More: A minimum tax of 20% for individuals earning over €250,000 (or €500,000 for couples) is a discussed — though not universally approved — fiscal measure.
- Belt-Tightening: France aims to reduce its budget by €5 billion in the quest to limit its national debt.
Where the Money Goes
- Green Energy Drive: A sizable chunk of the budget is earmarked for Energy Transition, with an assignment of €16.8 billion allocated, an increase of €2 billion over previous years. This includes funds for environmental projects and addressing climate issues.
While specific data on the planned deficit for 2025 isn't readily available in the source materials, it's clear that the French government is focused on deficit reduction strategies. In 2026, the government plans to slash an additional €40 billion in expenses to whittle down the public deficit, without any new tax hikes on the horizon for that year. Though particulars on the 2025 deficit plan haven't been disclosed in the sources, they will likely be part of a broader fiscal strategy to navigate the nation's financial challenges effectively.
One important clarification: François Bayrou is not the current Prime Minister of France. Despite his presence in political discussions and media interviews, the current government remains under President Emmanuel Macron's political structure, with figures like Economy Minister Éric Lombard influencing the country's economic policies significantly. Bayrou's involvement is limited to commentary and discussion, rather than leading the aforementioned government mentioned in these budgetary plans.
- François, despite media speculations, is not the current Prime Minister of France.
- The budget ministers, Éric Lombard and Amélie de Montchalin, intend to finalize the new budget by February 2024.
- The proposed budget for 2025 in France is projected to exceed €844 billion.
- To limit France's national debt, the new budget aims to reduce expenditure by €5 billion.
- A significant portion of the budget, €16.8 billion, will be allocated for the Energy Transition, focusing on environmental projects and climate issues.
