(Bloomberg) — France’s interim government is preparing a stable budget for next year that should help the country meet a goal of cutting its budget deficit below 3% of economic output by 2027, an official in the prime minister’s office said.
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Ministries will be told this week how much they can spend in 2025, with the total amount remaining unchanged year-on-year at €492 billion ($546 billion), the official told reporters, taking into account €10 billion in savings to offset forecast 2% inflation.
Outgoing Prime Minister Gabriel Attal wants to have a budget ready for his successor that absorbs price increases but also restores government finances and focuses on priorities such as military spending, the official said, speaking on condition of anonymity in line with government rules.
Preparations are aimed at enabling the new government to meet the deadline and submit the budget bill to parliament by October 1, the official said.
France’s public finances are being closely watched after last year’s budget deficit was much higher than expected, prompting a rebuke from the European Union in the form of a so-called excessive deficit procedure, which requires recovery measures and can lead to fines for non-compliance.
Emmanuel Macron’s decision in June to call early parliamentary elections after a defeat in the European Parliament vote raised investor uncertainty, as it left the lower house divided and no group able to form a new government.
The president has yet to choose a new prime minister and has opted to reappoint Attal as head of an interim government until after the Olympics, which end on August 11. He plans to meet with leaders of parties and groups represented in parliament on Friday before making a decision.
The next government will be able to make adjustments to the budget bill based on its priorities before it is submitted to parliament, the official said. Parties from both the left and right campaigned on promises of additional spending.
The new prime minister will also benefit from good news during a turbulent summer in the EU’s second-largest economy. French unemployment fell unexpectedly in the three months to June, while the Paris Olympics are expected to spur growth in the third quarter, the Bank of France said.
–With assistance from Samy Adghirni.
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