'Frexit or die!' Emmanuel Macron's recovery plot with EU Commission sparks outrage


France’s fiscal program will be officially presented to the Commission next week. Debt stabilisation and a return to the deficit below 3 percent of GDP are planned for 2027, at the cost of an unprecedented effort on public spending.

Growth for the country is forecast at 4 percent in 2022.

France, which broke the limit for a decade until 2017, aims to gradually cut its deficit and only return to the 3 percent limit long after the crisis is expected to subside, according to annual long-term public finance plans the government will send to the European Commission this month.

Paris now plans to cut its public sector budget deficit to 2.8 percent of GDP by 2027 from a post-war record of 9.2 percent last year, a first Finance Ministry source said.

With France struggling to rein in a third coronavirus wave with new lockdown measures, the government expects an extra €55 billion in crisis spending this year, including additional support for the health system, a second ministry source said.

This year the ministry expects only a marginal improvement, projecting the deficit will fall to 9.0 percent.

The plan was lambasted by Les Patriotes leader Florian Philippot who claimed it looks like a repeat of the catastrophic austerity measures imposed on Greece by the European Central Bank after the 2008 financial crash.

He said: “The government will send its ‘stability program’ to the European Commission.

“A real Greek austerity plan to meet German demands!

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To stay on that path, the ministry wants a cap on spending growth to be written for the first time into a new multi-year budget planning law, the first source said.

Finance Minister Bruno Le Maire is even in favour of tweaking the constitution to include such a spending cap, the source said, although that is unlikely to be possible until after a presidential election next year.

In addition to limiting spending growth, once the crisis is over France will need to carry out structural reforms such as a retirement system overhaul that was put on ice when the outbreak began last year, the first source said.

While the EU public finance rules have been suspended, some member governments such as France are pushing to revise them once the crisis has waned.

The first Finance Ministry source said the most important rule to revise would be limits on debt as countries would be emerging from the crisis with widely diverging debt burdens.

In France’s case, the Finance Ministry expects the national debt to edge up from 117.8 percent of GDP this year to peak at 118.3 percent in 2025 before it begins to fall.

France’s long-term budget plans are built on estimates that the euro zone’s second biggest economy can rebound 5.0 percent this year after contracting 8.2 percent last year.

Next year the economy was seen growing 4.0 percent with the rate gradually slowing to 1.4 percent annually from 2025, according to the ministry’s projections.



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