The French are currently learning that their state is living far beyond its means. This in itself is nothing new: the last French government to have a balanced budget was half a century ago – in 1974. But this time, for 2023, the deficit is much higher than the government already thinks had taken into account. A “derailment”, as all the media call it, “un dérapage”. Only the adjective used varies: “big”, “spectacular”, “catastrophic”. There is little room for interpretation.
According to the National Institute for Statistics and Economic Studies, or Insee, France spent 154 billion euros more than it earned last year. The deficit is therefore 5.5 percent of gross domestic product. The budget was 4.9 percent. President Emmanuel Macron and his Economy Minister Bruno Le Maire are now asserting at every opportunity that they want to reduce the deficit below the ominous Maastricht three percent threshold by 2027 in order to calm the markets and the international rating agencies. But the country urgently needs to find new funds: ten billion euros for 2024, for a small course correction. The question is: where? And how?
France will soon have to pay 80 billion euros to its lenders
The consolidated figures from Insee also show that national debt has only fallen very slightly compared to 2022; it stands at 110.6 percent of national economic output. Only Greece and Italy have even higher debts. France now pays 50 to 60 billion euros to its lenders every year, and this will soon rise to 80 billion. It is also worth remembering, says Pierre Moscovici, president of the French Court of Auditors and former socialist finance minister, that all countries in the euro zone are in the process of reducing their deficits – “except France.”
Moscovici is now the chief explainer of the numbers. He has the gift of speaking very clearly. We had to tell the French “the truth,” he made it clear on the radio station France Inter, as soon as the statistics had become known, “and without taboos”: “We have our backs to the wall.” He doesn’t want to be alarmist, France is a solid country, the debt can be financed and lenders can always be found. “But we have to get serious now and open our eyes.” François Villeroy de Galhau, governor of the Banque de France, France’s central bank, speaks similarly: “For forty years it has never been the right moment to get public spending under control,” he said a few days ago. “We are calmly passing on a time bomb to future generations.”
Politics is criticized. Macron was once considered a sensible and fairly strict accountant. Since the start of the pandemic, the reputation has changed. The president is accused of having calculated far too optimistically: his big political promise, full employment in the country, should also ensure that enough tax revenue flows into the state’s coffers. But now unemployment is growing again. Income from the massively crisis-ridden real estate market is also declining. And overall growth was weaker than hoped.
The forecasts predict a victory for Marine Le Pen’s extreme right
It doesn’t work without sacrifice. But victims are unpopular. Austerity limits political space, and that could have serious consequences for the government camp in the European elections in June. The poll institutes’ forecasts predict a victory for Marine Le Pen’s extreme right; The Macronists are almost ten percentage points behind in the surveys.
This is also why you can now hear Economy Minister Le Maire saying everywhere that there will be no tax collection, for anyone. Rather, he will reduce costs in public administration and cut subsidies. “Even support for Ukraine is now leading to budgetary and political headaches,” writes Le Monde. “Up to three billion euros” are promised this year.
Opinions also differ in Macron’s own camp about the appropriate budget policy. François Bayrou, the head of the centrist MoDem party, warns that the debate about higher taxation of companies’ “super profits” and “super dividends” must be opened.
In doing so, he hits a point in the hearts of the people: there is a widespread feeling among the French middle class that they pay far too much to the state, while the rich and the big business leaders get off relatively lightly. All surveys show this too.
Le Maire’s appearance these days surprises many. He has a new book on the market right now, a new one comes out almost every year. Most of them are novels, sometimes with an erotic touch. When does he find the time to write? That remains his mystery. This time it is a kind of application letter for the 2027 presidential election, it is entitled: “La Voie Française”, the French way. He tours the media with it and says that it is now finally necessary for France to control its spending and show more discipline. Well, Bruno Le Maire has been France’s Minister of Economy and Finance since 2017.