France’s fiscal problems just keep mounting. The European Commission estimates the country’s public debt, which was 110.6% of GDP in 2023, will rise to 112.4% this year and 113.8% in 2025. Earlier this month, Prime Minister Michel Barnier announced austerity plans to limit the ballooning deficit. But is France actually on the path back to solvency?
The budget deficit for 2024 has turned out to be far bigger than previously disclosed. It looks like the French voting public and numerous institutions, including the European Commission, were misled about the dire state of the country’s finances. This has led to the launch of a parliamentary inquiry that will investigate who knew what, and when — and who chose to sweep bad news under the rug. Legal charges may follow.
Barnier’s government has chosen to deal with France’s budget blowout by raising taxes further. Announcements of spending cuts and a tightening of the public purse strings is dishonest. With 41 ministers on the payroll, Barnier has actually managed to increase the government’s footprint, at least in popular opinion, and raise spending by roughly 2%.