France’s national auditor has sounded the alarm about “worrying” budget deficits and public debt, warning the country is failing to come into line with Eurozone fiscal rules and is “dangerously exposed” to any fresh economic shock.
The latest statement from the Cour des comptes on Monday is embarrassing for President Emmanuel Macron’s outgoing government and his finance minister Bruno Le Maire. It is also directed at politicians from the far left to the far right, who are seeking power following the inconclusive snap National Assembly election and plan to impose policies that would place further strain on the public finances.
French public debt has now reached €3.1tn or 110 per cent of GDP, while the budget deficit last year was €154bn or 5.5 per cent of GDP, much worse than predicted by Le Maire and 0.7 percentage points higher than in 2022. France now faces an “excessive deficit” procedure brought by the European Commission, charged with enforcing the EU’s limit of 3 per cent of GDP.
“This situation would be less of a problem if it was the same for European neighbours, but that’s not the case,” Pierre Moscovici, chair of the Cour des comptes, told a news conference. “We have rather diverged from the Eurozone . . . and as we approach the Olympics that’s not the podium finish I dream of for my country.”
Le Maire, in a separate briefing, told journalists on Monday that it was essential to restore France’s public finances.
“As the finance minister who brought France out of the excessive deficit procedure in 2018, I can say that history endlessly repeats itself,” he said. “It’s vital to cut expenditure. It’s vital to pursue the path of reforms. That’s why, since the start of 2024, I’ve committed to €25bn of savings — and I remind you that I introduced those savings against the advice of all our opponents.”
Moscovici, however, criticised the government’s failure to meet its own deficit reduction targets and said the trajectory outlined for 2025 to 2027, which would supposedly bring the annual deficit below the Eurozone limit of 3 per cent by the end of the period, was “less and less credible”.
The leftwing alliance that won the most National Assembly seats — but not a majority — in the legislative election has promised a radical tax-and-spend agenda that would have a big impact on the budget, as would the plans of Marine Le Pen’s far-right Rassemblement National that came third behind Macron’s centrist group.
Moscovici would not comment on the likely fiscal effects of each manifesto, and said there were various different paths to bringing public finances under control. But he added that it was “imperative” for any future French government to take action. French public spending, at 56 per cent of GDP, is among the highest in the world.
“It’s not a question of right or left, it’s a question of public interest,” said Moscovici, noting that the cost of servicing the debt was forecast to rise from €55bn this year to €83bn in the next three years on the back of the ballooning fiscal burden and high interest rates. “It’s the most stupid public spending there can be . . . It’s unproductive spending.”
In its report, the Cour des comptes also warned about France’s unfunded commitments to reduce greenhouse gas emissions to help tackle global warming. By 2030, this would cost households, businesses and the state more than €60bn a year, with the added complication that income from fossil fuel taxes is set to fall steadily as electric vehicles replace those with internal combustion engines.
The auditor said the combination of these climate change factors — the need for more investment, the loss of tax income and loss of growth — could further increase French public debt by about seven percentage points of GDP by 2030, an impact that had not been accounted for by the government in its fiscal planning.
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