French Public Finances Face Critical Challenges Ahead of 2025 Budget
Pierre Moscovici, the first president of the Court of Auditors, expressed grave concerns regarding France's public finances during a session with the National Assembly's Finance Committee. He stated that the government's target to reduce the public deficit to 5.1% of GDP by 2024 is unlikely to be met due to lower-than-expected tax revenues, increased local government spending, and unrealized savings. Moscovici characterized the current financial situation as 'really worrying' and emphasized the need for the next government to present a new fiscal trajectory, as the existing one has become 'outdated.' He warned that achieving a deficit below 3% of GDP by 2027, a goal reiterated by the outgoing Minister of Economy and Finance, Bruno Le Maire, would require excessively large savings that could hinder growth. Instead, he suggested that a return to the 3% threshold by 2029 would be more realistic, aligning with European budgetary rules.
Italy's Medium-Term Structural Budget Plan Aims for Fiscal Prudence
In a parallel development, the Italian government has introduced the Medium-Term Structural Budget Plan, aimed at reforming European budget rules. The plan outlines a net spending trajectory that aligns with European authorities' expectations, with an average growth rate of net spending projected at around 1.5%. The Italian government is committed to reducing the deficit/GDP ratio below the 3% threshold by 2026, which is seen as a more ambitious target than that proposed by the European Commission. The plan also includes strategic reforms and investments focusing on enhancing public administration, justice, and tax compliance to address future financial challenges effectively. This comprehensive approach aims to ensure the stability of Italy's public debt while fostering economic recovery.
