The French Government had to adjust its growth forecasts for this year downwards to 1 %, four tenths below the previous target. This will mean an immediate cut in public spending of EUR 10 billion.

The French Minister of Economy and Finance, Bruno Le Maire, announced this budgetary adjustment in an interview with the TV channel TF1, justifying it “out of responsibility” to maintain the target of reducing the government deficit to 4.4 % of Gross Domestic Product (GDP).

Despite the downward correction in growth projections to align with the major prospecting institutions, Le Maire emphasized that the situation remains “positive” and that the political context will be taken into account.

This context is marked by the impact of the war in Ukraine, the conflict in the Middle East, which affects trade flows across the Red Sea, the recession in Germany (France’s main trading partner) and a stronger-than-expected slowdown in activity in China.

Regarding the maintenance of the 4.4 % deficit target, it underlines that it is necessary to “keep our public finances under control”.

In addition, it has decided not to raise taxes, a policy that French President Emmanuel Macron has applied since the beginning of his first term in 2017, and they assure that they will not deviate from that line.

With regard to the cuts, it is expected that the effort will fall on the State Administration, without affecting social security. Of the $10 billion, $5 billion will come from adjustments to the operating expenses of all ministries, depending on their weight in the overall budget.

K. Tovar

Source: Notiamerica

(Reference image source: Scott Graham at Unsplash)

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