Austerity Budget Introduced in France to Address High National Debt
France’s New Centre-Right Government Aims to Save €60 Billion
The French government, led by Prime Minister Michel Barnier, has introduced an austerity budget aimed at addressing the country’s high national debt. The plan, announced on Thursday, aims to save and generate an additional €60 billion (US$65.5 billion) next year.
Spending Cuts and Tax Increases
According to the government’s explanation, two-thirds of this amount is expected to come from spending cuts, with the remaining third coming from tax increases targeting high-revenue companies and high-income households.
Consolidation Plan and Deficit Procedure
France’s current budget deficit stands at 6.1% for the current year. The government plans to reduce this to 5% by 2025 and bring it back to below the European limit of 3% by 2029. The European Commission is conducting a deficit procedure against France, and the country must present a consolidation plan to Brussels by the end of October.
Opposition and Criticism
The austerity budget is facing resistance in Parliament, with criticism coming from both left- and right-wing nationalists. Within the government’s own ranks, some members are dissatisfied with the budget cuts. The High Council of Public Finance has also evaluated the government’s plans, judging the underlying growth forecasts to be too optimistic.
Potential Power Struggle
Since the government does not have a majority in Parliament, it might have to either pass a heavily amended budget or force it through using a special article in the constitution bypassing lawmakers. Budget negotiations could become a power struggle for the government, and street protests are not ruled out.
Conclusion
The French government’s austerity budget is a crucial step in addressing the country’s high national debt. However, the plan faces opposition and criticism from various quarters, including the opposition parties and within the government itself. The success of the budget will depend on the government’s ability to navigate these challenges and implement the necessary measures to reduce the deficit while avoiding economic stagnation.
Frequently Asked Questions
- What is the aim of the austerity budget?
The aim of the austerity budget is to save and generate an additional €60 billion (US$65.5 billion) next year. - What is the current budget deficit in France?
The current budget deficit in France stands at 6.1% for the current year. - What is the European Commission’s stance on France’s deficit?
The European Commission is conducting a deficit procedure against France, and the country must present a consolidation plan to Brussels by the end of October. - Is the government facing opposition to the budget?
Yes, the government is facing opposition to the budget from both left- and right-wing nationalists, as well as from within its own ranks. - What are the potential consequences of the budget negotiations?
The budget negotiations could become a power struggle for the government, and street protests are not ruled out.