France needs to introduce 25 billion euros in cuts to tackle EU deficit
The French government has announced plans for €25 billion in budget cuts this year to address EU concerns over its deficit and debt levels.
Finance Minister Bruno Le Maire stated these cuts are necessary to reduce the deficit to 5.1 percent of GDP, revised from an earlier 4.4 percent target.
This announcement comes in the wake of France's recent parliamentary elections, which resulted in no single party winning an outright majority. A left-wing alliance, the New Popular Front (NFP), gained the most seats but falls short of a majority.
The European Commission has criticised France for its financial state, with debt exceeding 110 percent of GDP – nearly double the EU-authorised level. While the Commission can theoretically fine EU members for excessive deficits, it has never done so.
The NFP's economic plans, including reversing pension reforms and increasing the minimum wage, could further increase deficits. This prospect has affected France's creditworthiness, with investors demanding higher returns on French government bonds compared to some other European countries.
Standard & Poor's recently downgraded France's sovereign debt rating to "AA-" due to growth concerns. Despite these challenges, Le Maire has pledged to bring the deficit below 3 percent by 2027, in line with EU requirements that were temporarily suspended due to the COVID-19 pandemic and the Ukraine war's economic impact.
(with newswires)
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