The European Commission estimates that France and three other countries (Belgium, Croatia, Finland) “risk not being in line with the budgetary recommendations” of the European Union (EU) for next year, due to public spending excessive. These four countries must “reduce spending” to respect European limits, Commission Vice-President Valdis Dombrovskis said at a press conference on Tuesday.
Brussels communicates every six months on the budgetary trajectories of the 20 member countries of the euro zone. She published her opinion on the budget projects for 2024 on Tuesday. In Paris, the Ministry of Finance appears calm. France is “in line” with the reduction of the public deficit, expected at 4.4% of gross domestic product (GDP), after 4.8% in 2023, we explain at Bercy.
The deficit must be reduced from 2027 to 3%, the limit set by the Stability Pact, the budgetary corset imposed on countries sharing the single currency. “Substantial progress has been made with regard to the structural elements of the budgetary situation in France,” welcomed the Commissioner for the Economy, Paolo Gentiloni.
Within the euro zone, no draft budget for 2024 presents “a serious risk” of non-compliance with the Pact, the Commission also welcomed. The limit for the growth of net primary expenditure, that is to say excluding interest charges and the impact of tax increases or reductions, was set by the EU at 2.3% for France in 2024.
The Commission predicts that it will actually reach 2.8%. But Bercy emphasizes that its finance bill expects 2.6%, a gap of 0.3% deemed “limited”. “We will keep our forecasts. Outside of the Covid period, France has always respected its forecasts in recent years,” we underline at Bercy. Paris also estimates that the upward revision this fall of growth prospects for France should modify the assessment of the evolution of its expenditure, an element not taken into account in the opinion published Tuesday and which, according to Bercy, would the country is in trouble.
EU fiscal rules were turned off in early 2020 to avoid a collapse of the European economy hit by the Covid pandemic. It was a matter of temporarily letting spending go to support growth. This exceptional measure was extended until the end of 2023 due to the repercussions of the war in Ukraine, but the Stability Pact will be reactivated on January 1. This set of rules, which also imposes a public debt ceiling of 60% of GDP, is currently being reformed and a consensus between member states on the renovated Pact is hoped for in December.
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In the future, control will focus on changes in spending, an indicator considered more relevant than the deficit and already highlighted in Tuesday's publication. The Commission has warned that it could launch infringement procedures for excessive deficit next June against countries having exceeded 3% of public deficit this year. In addition to the four countries singled out on Tuesday, Paolo Gentiloni stressed that nine other member states were “not completely in line” with the recommendations, including Germany which is called, like France, to remove the measures “as soon as possible”. aid adopted to reduce the energy bills of households and businesses.