Both France and the UK are currently navigating significant fiscal challenges, with both countries implementing substantial tax increases to address budget deficits and public service needs.
The French budget discussions highlight potential legal hurdles in tax implementation, which could hinder the government's revenue plans, while the UK budget reflects a strategic pivot towards public investment after years of austerity.
Chancellor Rachel Reeves' budget in the UK marks a significant shift in fiscal policy, emphasizing investment over austerity, contrasting with the previous Conservative government's approach.
The proposed tax measures in France may face rejection in the lower house, leading to a revised budget being sent to the Senate, which could alter the anticipated revenue projections.
In the UK, the Labour government's budget could set a precedent for future fiscal policies, focusing on public investment and potentially leading to a sustained period of higher taxation.
Next Tuesday, the National Assembly in France will continue discussing the tax portion of the finance bill after deputies failed to examine all amendments by the deadline. According to Charles de Courson, the general rapporteur of the budget, the measures already adopted amount to 30 billion euros in additional taxes, notably from a proposed tax on billionaires' assets, which could generate 13 billion euros, and a 10% solidarity tax on dividends expected to bring in 6 billion euros. However, many of these measures could face legal challenges, with 23 billion euros potentially in conflict with European law or the Constitutional Council.
In the UK, Labour's first budget in 14 years has been presented by Chancellor Rachel Reeves, featuring a historic tax increase of 52 billion dollars. This budget aims to address the fiscal challenges following 14 years of Conservative austerity and the impacts of the COVID-19 pandemic. Key allocations include funding for defense, the NHS, and education, alongside significant tax hikes on income and capital gains. The budget is characterized by a commitment to public investment and a rejection of austerity, aiming to boost economic growth by 1.4% over the long term.
