The France will cut spending to restore its public finances

These savings proposals, which will be the subject of consultations, will also partly feed the draft budget for 2024 that will be presented in September and which will require at least 12 billion euros in savings for this year alone, said a source at Bercy.

After escaping the sanction of the S&P Global agency, which maintained the French solvency rating, the executive intends to reaffirm its budgetary seriousness and turn the page on expensive measures to support "whatever it costs" in the face of the health and energy crises.

"Now that we are back to normal, who would understand that we continue to spend so much?" said Economy Minister Bruno Le Maire, opening the Assises des finances publiques in Bercy.

France: Debt and public © deficit Sylvie HUSSON, Paz PIZARRO / AFP

This meeting follows the annual reviews of public expenditure, launched a few months ago. However, they are shunned by the three main associations of local elected officials, who disagree with the analysis of the situation.

In order to reduce the debt and the public deficit until 2027, "we have identified, in particular with our first review of public spending, at least 10 billion euros in savings," said Bruno Le Maire.

These savings will have to be found on health, by fighting against the explosion of sick leave and "the excesses" of drug spending, he detailed.

Housing aid with the abolition of the Pinel device and the overhaul of the Zero Rate Loan (PTZ), for a saving of two billion euros, as well as support for employment in this period of low unemployment are also in the government's sights, more particularly apprenticeship and the personal training account.

Another target is the tax advantages on fuels enjoyed by certain professions such as road hauliers or farmers, while the France is making the shift to the energy transition. They will be phased out by 2030, with support to enable these professions to make this switch.

No "austerity"

Asked about the need to find other savings for the draft budget 2024, a source at Bercy said that "there will be others" that will total "probably more" than 12 billion euros, citing an assessment of the Court of Auditors.

The Assises are only a "step", she added.

Bruno Le Maire, however, rejected "austerity" and said he did not want a "policy of the axe, which would kill our growth (...) by cutting expenses blindly."

Economy Minister Bruno Le Maire at a press conference at his ministry, in Paris on June 19, 2023 © JULIEN DE ROSA / AFP

The objective is to reduce the heavy debt of the France to 108.3% of GDP (Gross Domestic Product) in 2027 (against 111.6% at the end of 2022), which puts it on the side of the European bad pupils, and to bring the public deficit below the European target of 3% (4.7% at the end of 2022). All this will be included in a programming law scheduled for September.

To achieve this, the government is also counting on the end of the energy shield, the gains of reforms such as pensions or unemployment insurance, and full employment.

It also intends to perpetuate the journals that will screen each year about twenty public expenditures, to measure their effectiveness.

"We must assume that we have to make savings when we see that measures do not achieve their results or not sufficiently," said Prime Minister Elisabeth Borne at the end of the conference.

These efforts are considered all the more necessary as the economic environment tightens, with the restoration next year of European fiscal rules and the sharp rise in interest rates that significantly increases the debt burden.

The government could also, by presenting its next budget, revise its growth forecast for 2023, currently 1% and considered optimistic by most economic institutes.

Already, the executive has multiplied the announcements in recent weeks. He has frozen an additional 1% of the appropriations of the 2023 budget (1.8 billion euros) which will be partially canceled, according to Bruno Le Maire, and asked the ministries to make 5% savings, excluding salaries, in 2024 in particular to finance the energy transition.

But between refusal to increase taxation and social tension in the face of high inflation, the effort to control spending promises to be delicate. Especially after a painful pension reform and without an absolute majority in the National Assembly.

© 2023 AFP