The Minister of Economy and Finance Bruno The Mayor, April 24, 2024 in Paris (AFP/Archives/Thomas SAMSON)
The lowering of the French sovereign rating by one notch on Friday by the rating agency S&P Global Ratings due to growing debt gave the Minister of the Economy new arguments to justify future reductions in public spending, while continuing to rule out tax increases.
While the opposition seized the announcement of the downgrade by S&P to denounce the government’s poor budgetary management, with Marine Le Pen accusing Bruno Le Maire of having “ruined” France, the Minister of the Economy promised to “pursue exactly in the same lane without speeding up or slowing down,” in a video posted Saturday on YouTube.
Very present in the media since Friday, the tenant of Bercy has once again ruled out any tax increase in 2025, on BFMTV… and even until 2027, he then said on LCI: “never, I does not intend to increase taxes on the French.”
Mr. Le Maire places even greater emphasis on the need to reduce public spending, on the more than 450 billion euros of annual State spending.
The minister highlighted the 10 billion savings decided at the start of the year and his desire to seek 10 billion additional cuts in 2024, also praising the work of Eric Woerth, who formulated proposals on Thursday intended to “restore trust” between the State and communities.
– ‘Political fragmentation’ –
The Minister of Economy and Finance Bruno Le Maire once again ruled out on Saturday any tax increase next year, the day after the downgrading of France’s sovereign rating by the S&P agency due to chronic government deficits. country (AFP/Archives/EMMANUEL DUNAND)
The drop in the rating by S&P (from AA to AA-) should not in itself lead to an increase in the rates at which France borrows, but it expresses the deterioration of France’s public finances, which is moving one step closer. southern European countries, moving away from the more disciplined northern ones. Germany has never lost its Triple A, now three notches above France.
To make S&P lie, which does not see France’s deficit falling below 3% of GDP in 2027, unlike the government which is aiming for 2.9%, more pledges will have to be made.
As it stands, “the reforms will not be sufficient to allow the country to achieve its budgetary objectives”, criticized the rating agency in its analysis on Friday evening.
Asked about a possible deindexation of retirement pensions and social benefits to inflation next year, a potential savings route, Mr. Le Maire replied on BFMTV that no decision had been taken.
Without an absolute majority in Parliament, the government will have to find compromises with the oppositions, a difficult exercise and one highlighted by the rating agencies.
S&P noted “uncertainty over the government’s ability to continue to implement policies” due to “political fragmentation” in France.
On LCI, the minister bluntly said he hoped that S&P’s decision “opens the eyes” of parliamentarians to vote for savings.
– “Who would have done better?” –
The harsh exits from opposition figures on Friday evening do not bode well for an imminent agreement. From LFI to the National Rally (RN) via Les Républicains (LR), many have attacked the government on its budgetary seriousness, in the run-up to the European elections on June 9.
“I just say to Parliament: help me (…) instead of criticizing, come and help,” replied Bruno Le Maire on LCI, particularly reaching out to the LR and qualifying in passing the motions of censure filed by LFI and the RN linked to the “lunar aberration” deficit.
The minister also denounced the “complacency”, even “complicity”, of “certain economic elites” vis-à-vis the RN.
Mr. Le Maire, at Bercy for seven years, once again justified, in the first person, the widening deficits since 2020 by expenses linked to the Covid crisis and the tariff shield on energy.
“If today we have a high level of debt, that’s why? It’s because I saved the French economy,” underlined Mr. Le Maire.
“I made the right decisions at the right time, who would have done better?” he even said.
But “whatever it takes” was not exclusive to France. All European countries have had to intervene to manage the crises of the 2020 decade, including those better ranked than France such as Germany or Austria.
© 2024 AFP
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