The French administration is devising a plan to slash its expenditures by €4.2 billion ($4.71 billion) in 2024, as per the initial budget projections presented to the parliament. This marks the first reduction in spending compared to the preceding year in nearly ten years. Budget Minister Gabriel Attal disclosed that this decrease would result in a 3.5% year-on-year decline when adjusted for inflation.
Gradually Phasing Out Government Subsidies for Consumer Fuel and Electricity
In an effort to shield consumers from the escalating energy costs that arose during President Emmanuel Macron’s 2022 re-election campaign, the government introduced extensive subsidy programs for fuel and electricity prices. However, with energy prices now stabilizing, these measures will be gradually phased out in the forthcoming months. Consequently, the government anticipates a reduction in spending of almost €14 billion next year. Attal stressed that this transition aims to conclude extraordinary crisis spending and allocate resources toward financing the environmentally friendly transformation.
Addressing Concerns Regarding Public Finances
The government led by Macron has faced pressure to restore fiscal equilibrium, particularly after Fitch downgraded France’s rating to AA- in April. Apprehensions were raised regarding potential political deadlock and social unrest following an unpopular pension reform. While S&P did not downgrade France’s sovereign debt in June, the agency maintained a cautious perspective due to strained public finances. Excessive spending has emerged as an urgent matter as borrowing costs for the country have escalated significantly amidst interest rate hikes implemented by major central banks worldwide to combat inflation.
Efforts to Diminish Debt and Attain Fiscal Stability
To tackle these challenges, Finance Minister Bruno Le Maire has directed each ministry to identify reductions amounting to 5% of their respective budgets. A source from the finance ministry revealed that France’s strategy for reducing debt will encompass a range of measures, including savings in employment and housing policies.
French Government Implements Plan to Reduce Expenditure
The French government intends to curtail its outlay by €4.2 billion in 2024, signifying the first decrease in almost a decade. The objective is to transition away from extensive consumer subsidies on fuel and electricity, as energy prices have started to stabilize. This reduction forms part of broader initiatives to address concerns about public finances and reinstate fiscal stability. Finance Minister Bruno Le Maire has called for reductions in each ministry, aiming for a 5% reduction in spending. France’s strategy for reducing debt will involve various measures, including savings in employment and housing policies.
