The European Commission warned the French government that urgent changes to next year’s spending plans were needed, otherwise they would not comply with EU rules on debt and deficit, Politico reported.
France is among four countries that have received warnings over their budget plans from the bloc’s executive, which controls member states’ public spending. The rules governing the fiscal situation will come back into force on January 1 after a Covid-related pause imposed to allow greater investment.
EU Commission Vice-President Valdis Dombrovskis stated that “France’s draft budgetary plan risks not being in line” with the bloc’s rules, pointing to rising public spending and insufficient cuts in energy support.
Belgium, Finland and Croatia also received a warning, the Commission announced on Wednesday. Ignoring the warnings could trigger the Excess Deficit Procedure, which involves specific requirements to curb spending and potentially culminates in financial sanctions.
The pressure on France shifts the focus away from Italy, known for its public spending challenges. The Commission stated that Rome was “not fully in line” with the rules.” The same goes for Austria, Germany, Luxembourg, Latvia, Malta, the Netherlands, Portugal and Slovakia.
French Finance Minister Bruno Le Maire has repeatedly emphasised that France’s 2024 budget would mark the end of mismanaged economic spending, promising to phase out emergency measures related to the pandemic and energy crisis.
When the Commission announced its assessments, a representative of the French Ministry of Economy immediately underlined that Paris was unlikely to be penalised with an Excessive Deficit Procedure and that it would not have to amend its budget law.
We won’t have to take any adjustment measure on this evolution of primary net spending.
The official clarified that, unlike other EU countries, France had not received a written request from Brussels.
Next year, Paris expects €5 billion in spending cuts and a deficit of 4.4 per cent of GDP, which would exceed the EU threshold of 3 per cent. The Commission has also expressed concern that France’s debt-to-GDP ratio will rise to 110 per cent of GDP next year, while the EU limit is 60 per cent.
France’s breach of the deficit criteria means that the Commission could theoretically launch the Excessive Deficit Procedure, which would force non-compliant countries to adjust their spending.
The case of France is particularly sensitive because Paris has received special treatment before. In 2016, Commission President Jean-Claude Juncker justified his decision to give Paris a free hand in budgetary irregularities simply “because it is France.”
