France has cut another 5 billion euros from its budget to meet its deficit target

French Economy and Finance Minister Bruno Le Maire has announced that the French government's 2024 budget spending will be cut by another 5 billion euros on top of the 20 billion euros of budget cuts announced at the beginning of the year, in a bid to meet the budget deficit target.

The government had planned to reduce the budget deficit to 5.1 per cent of gross domestic product in 2024 and to within the 3 per cent limit set by the EU's Stability and Growth Pact by 2027. France's budget deficit in 2023 will be 5.5% of GDP.

According to a report released by the French Ministry of Finance on the 11th, due to the release of funds from the "France 2030" investment plan, the increase in military spending and the increase in teachers' salaries, by the end of May 2024, France's public spending has reached 44% of the annual budget, higher than the average level of 41% during the same statistical period between 2017 and 2023.

Debt is no better. At the end of March 2024, France's public debt rose to nearly €3.16 trillion, or about 111% of GDP. In 2023, France's public debt will be 110.6% of GDP, far exceeding the 60% required by the Stability and Growth Pact.

At the end of May, international credit rating agency Standard & Poor's projected that France's budget deficit would average 4.6 percent of GDP between 2024 and 2026, up from its previous forecast of 3.9 percent. The budget deficit will still be 3.5 per cent of GDP in 2027, above the government's 2.9 per cent target.