Michel Barnier presents a 2025 budget rich in €60 billion in savings and tax increases

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PARIS (Reuters) – One month after Michel Barnier entered Matignon, the 2025 Finance Bill (PLF), which provides for 60 billion euros in savings and tax increases, is presented this Thursday in Council of Ministers in an uncertain political climate.

“This is not an austerity budget”, repeat in unison the Ministers of the Economy, Antoine Armand, and of Public Accounts, Laurent Saint-Martin, regarding a text designed to tax the wealthiest French people. and large companies.

A break with the line followed since the arrival of Emmanuel Macron at the Elysée which is making the presidential camp, a fragile partner within a government led by a Republican leader after two months of procrastination caused by legislative elections which failed in a broken country as rarely under the Fifth Republic.

Between the pressure of the markets, which monitor an over-indebted France whose public deficit will reach 6.1% of gross domestic product (GDP) this year, and that of the National Rally able to bring it down, the team in power has a margin very narrow maneuvering.

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“It will be a difficult, serious and responsible budget,” repeats Michel Barnier, who on Tuesday survived a first motion of censure from left-wing deputies, which the RN did not vote for.

Objective of the PLF: reduce the public deficit to 5% in 2025, then to 3% by 2029 in accordance with Brussels requirements.

Of the 60 billion to be found, 40 billion would come from reductions in public spending and 20 billion from tax increases. A significant effort which is added to the 10 billion savings decided by the previous government.

Among the options are the postponement from January to July of the indexation of pensions, a source of around four billion savings, the merger of certain public services and a reduction in the number of civil servants.

The idea of ​​increasing taxes on electricity – partly offset by a decline in energy prices on the markets – is also on the table.

On the tax side, 65,000 wealthy households would be taxed to the tune of two billion additional euros, warned Michel Barnier, who also mentioned some 300 companies being put to work for a year or two.

“NOT ENOUGH REFORMS AND TOO MANY TAXES”, JUDGE ATTAL

Opposed to any tax increase, the former majority launched other ideas like former Prime Minister Gabriel Attal, who suggested to his successor to sign the decree reforming unemployment insurance prepared by his care.

“The government will obviously be able to count on our support in the storm,” the man who now heads the Ensemble pour la République group at the Palais-Bourbon told the press on Wednesday. “On the other hand, we have differences on some means. The fear is that the budget does not include enough reforms and too many taxes.”

Former Minister of the Interior Gérald Darmanin, for his part, proposes making civil servants work 37 hours instead of 35 and eliminating a public holiday.

“We are very attentive to the fact that (budgetary) decisions do not break the engine of growth,” former Minister Delegate for Public Accounts and EPR MP Thomas Cazenave declared on France 2 on Thursday.

On the opposition side, the left denounces a budget that is harmful to public services and the National Rally accuses the government of continuing the policy pursued until now.

The government’s draft budget “is a disaster for the daily life of the French and also for the economy because it will have a recessive effect”, judged Thursday the deputy La France Insoumise (LFI) and president of the affairs committee Economic Affairs of the Assembly, Aurélie Trouvé, on France inter.

The first secretary of the Socialist Party (PS), Olivier Faure, regretted that the tax effort requested from the richest and large companies was only temporary.

“We are on a trajectory which is not at all a trajectory for the richest. It is a trajectory for everyone else, and it will not be temporary,” he said on franceinfo.

“These are penny-pinching savings, they show no imagination,” lamented RN deputy Philippe Ballard to Reuters.

The budgetary debate, which begins Friday morning in the Finance Committee, promises to be lively.

“Assuming our responsibilities means taking the risk of being unpopular,” Marc Fesneau, president of the MoDem group in the Assembly, told Reuters.

On October 3 on France 2, Michel Barnier mentioned a possible use of article 49.3 of the Constitution to ultimately adopt the budget at the end of the year.

“I would like it to be adopted by the National Assembly,” he said. “But if we don’t succeed, we will use 49.3, which is a tool of the Constitution.”

(Written by Elizabeth Pineau, edited by Blandine Hénault)

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