France’s newly appointed Finance Minister, Éric Lombard, has announced that the country’s delayed 2025 budget bill will aim for a deficit “slightly above 5%” of GDP. This marks a cautious approach to fiscal consolidation, reflecting the government’s intent to balance deficit reduction with economic growth.
A Higher Deficit Target for Growth
Lombard’s target exceeds the 5% deficit proposed by the previous administration but represents a reduction from this year’s projected deficit of over 6% of GDP. Speaking to La Tribune Dimanche, Lombard emphasized the importance of achieving fiscal discipline without compromising France’s economic momentum.
“To protect growth, the reduction of the deficit must come more through reductions in public spending than through taxation,” he explained, adding that any tax increases should be “very limited.”
This approach contrasts with the previous government’s austerity-driven measures, which faced significant backlash and led to its downfall in a no-confidence vote earlier this month.
Challenges Ahead for Lombard
Lombard, formerly the head of Caisse des Dépôts, faces the complex task of navigating the budget through a divided parliament. With Prime Minister François Bayrou’s government lacking a working majority, bipartisan cooperation will be essential.
Lombard has pledged to consult all political parties to develop a budget proposal that garners broad support. His conciliatory approach could be key to overcoming the political stalemate that has hindered progress on fiscal reforms.
A Balancing Act
The emphasis on reducing public spending rather than increasing taxes aligns with the government’s strategy to stimulate investment and safeguard economic recovery. However, implementing spending cuts without undermining essential public services or triggering public discontent remains a delicate balancing act.
The targeted deficit reduction also signals France’s commitment to addressing its fiscal challenges while maintaining flexibility to respond to economic uncertainties.
Looking Ahead
Prime Minister Bayrou has set a mid-February deadline for finalizing the budget. Lombard’s leadership will be critical in shaping a fiscal policy that strikes a balance between fiscal responsibility and economic resilience.
As France faces mounting economic pressures, Lombard’s vision of prioritizing growth over austerity offers a pragmatic path forward, albeit one fraught with political and economic challenges.
Created by:
“Korça Boom”
