The French Finance Ministry warns that the government deficit could rise to 5.6 percent of GDP this year and as much as 6.2 percent in 2025 as the political crisis continues.
The risk of a widening budget deficit in France is putting further pressure on President Emmanuel Macron, who has stepped up his efforts to form a new cabinet after inconclusive July 7 elections.
Since July, an interim government led by Macron’s ally Gabriel Attal has been in power.
Finance Minister Bruno Le Maire and Public Budgets Minister Thomas Cazenave expressed their concerns about the “extremely rapid increase in local government expenditure” in a letter to lawmakers on Monday evening.
In addition, the two ministers warned that tax revenue forecasts might not be met.
France, Europe’s second-largest economy, is targeting a deficit of 5.1 percent of gross domestic product (GDP) this year.
The public sector budget deficit could rise to 5.6 percent this year and 6.2 percent next year if 60 billion euros in cuts are not implemented, according to Eric Coquerel, head of the finance committee of the National Assembly, the lower house of the French parliament.
“Revenues have fallen, that is the biggest problem,” Coquerel told broadcaster BFM Business on Tuesday.
France is under pressure from Brussels to get its finances in order within EU rules, which require a deficit of less than 3 percent of a country’s GDP and a government debt of less than 60 percent. Currently, France’s deficit is 5.5 percent of GDP and its debt is 110 percent of GDP.
October 1 is the legal deadline by which a government must submit a draft budget law for 2025 to parliament.
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