French lawmakers warned of ballooning budget deficit risk

(COMBO) (FILES) This combination of pictures created on September 3, 2024, shows Hauts-de-France region President Xavier Bertrand (L) posing during a photo session in Paris, on July 1, 2021, and former French Prime Minister Benard Cazeneuve posing during a photo session in Paris, on June 25, 2018. – France’s President, Emmanuel Macron is “rather” leaning towards “a political solution” in his search for a new Prime Minister who will not be immediately censured by the National Assembly, and is continuing to test the Bernard Cazeneuve or Xavier Bertrand options with political forces, a person close to the President said on September 3, 2024. (Photo by JOEL SAGET / AFP)

Paris, France — The public deficit in France is at risk of reaching 5.6 percent of GDP this year and even 6.2 percent in 2025, the finance ministry has warned, as a political crisis rumbles on.

The risk of France’s growing budget deficit piles further pressure on President Emmanuel Macron, who has been intensifying efforts to find a new cabinet following the inconclusive July 7 polls.

The caretaker administration under Macron’s ally, Gabriel Attal, has been in place since July.

READ: France vows to cut deficit within EU rules by 2027

Finance Minister Bruno Le Maire and Thomas Cazenave, minister for public accounts, expressed concern about the “extremely rapid increase in local government expenditure” in a letter sent to lawmakers on Monday evening.

On top of that, the two ministers warned that tax revenue forecasts might not be met.

France, Europe’s second biggest economy, is aiming for a deficit of 5.1 percent of gross domestic product (GDP) this year.

Eric Coquerel, the head of the finance committee in the National Assembly, French parliament’s lower house, said the public sector budget deficit could reach 5.6 percent this year and would rise to 6.2 percent next year if budgetary cuts of 60 billion euros are not made.

“Revenues have fallen, that’s the main problem,” Coquerel told broadcaster BFM Business on Tuesday.

France is under pressure from Brussels to get its finances back within EU rules, which demand a deficit below three percent of a country’s GDP, and public debt under 60 percent. Currently France’s deficit stands at 5.5 percent of GDP, and its debt at 110 percent of GDP.

October 1 is the legal deadline by which a government must present the parliament with a draft budget law for 2025.