France’s public finances are in dire straits, according to the national public audit office, Cour des Comptes. The staggering deficit figure of 154 billion euros has left the country dangerously exposed to potential economic shocks. This financial crisis comes at a delicate time for President Emmanuel Macron’s government, following a parliamentary election that resulted in a hung parliament.
Pierre Moscovici, the former French finance minister and the head of Cour des Comptes, highlighted the escalating costs associated with servicing France’s debts. The annual debt repayment has already soared to 52 billion euros and is projected to reach a staggering 80 billion euros by 2027. This leaves little room for other essential expenditures like education, justice, security, and funding the ecological transition, creating a significant financial burden for the country.
The audit office also raised concerns about France’s lack of consideration for environmental protection policies in its public financing programs. The costs associated with transitioning to renewable energy and other green initiatives are estimated to add an extra 60 billion euros annually by 2030. These investments are crucial for achieving the country’s emission reduction targets and transitioning away from fossil fuels by 2050.
France’s financial woes have caught the attention of the European Commission, which has warned the country, along with six others, of running budget deficits that exceed the EU limits. France’s deficit reached 5.5% of GDP in 2023, exceeding the EU’s 3% limit, while the public debt stood at 110.6% of GDP. The EU expects this debt burden to climb even higher in the coming years, raising concerns about France’s ability to meet the EU’s fiscal criteria.
Macron’s government has vowed to bring the deficit back to the EU-mandated limit of 3% by 2027, despite facing hurdles due to the parliamentary deadlock. Credit rating agencies like Moody’s and S&P Global have issued warnings about the negative impacts of the political impasse on the French economy. The lack of a clear majority in the parliament has further complicated France’s ability to address its financial challenges and fulfill its commitments to the EU.
France’s public finances are at a tipping point, with escalating deficits, rising debt servicing costs, and inadequate provisions for environmental initiatives. The country’s ability to meet EU fiscal regulations and avoid economic sanctions remains uncertain, casting a shadow of doubt over its financial stability in the coming years. Immediate and decisive actions are needed to address these pressing financial issues and safeguard France’s economic future.