French Finance Minister Bruno Le Maire has declared a downward revision in the country’s 2024 GDP growth forecast, lowering it from 1.4 per cent to 1 per cent. This change comes in light of mounting hostilities in Ukraine and Gaza, as well as a notable slowdown in economic activities among key trade partners such as Germany and China.
In an interview, Le Maire shed light on the impact of geopolitical shifts on the economic landscape, citing concerns related to the war in Ukraine, tensions in the Middle East, disruptions in maritime transport in the Red Sea, and the economic slowdown in China and Germany.
To address these economic challenges, the Finance Minister unveiled a plan to reduce State spending by 10 billion euros ($10.8 billion) across all government agencies and departments. He assured citizens that there would be no tax hikes or reductions in social security payments, but rather a collective effort from all ministries and agencies to contribute to expenditure cuts.
“We will immediately cut ten billion euros in State expenditures in the coming days,” announced Le Maire. The reductions include five billion euros in operating expenses across ministries and an additional five billion allocated to public policies. Notable cuts involve one billion euros in public aid for development and a corresponding amount for residential building renovation subsidies.
Le Maire expressed determination to uphold the 2024 State deficit target of 4.4 per cent of GDP. He revealed the possibility of implementing a supplementary budget in the summer, depending on economic circumstances and the political landscape. The government’s broader objective is to gradually diminish the fiscal shortfall until it falls below the EU ceiling of 3 per cent in 2027.
This revised forecast aligns with recent adjustments made by the European Commission, the OECD, and the French statistics agency INSEE, indicating a more cautious outlook for France’s economic growth in the coming years.
In summary, France is taking proactive measures to navigate through economic uncertainties exacerbated by global tensions, aiming to maintain stability and eventually achieve long-term fiscal sustainability.
