The Minister of Economy and Finance, Bruno Le Maire, announced on Sunday 18 February a downward revision of France’s growth forecast for 2024 from 1.4 to 1%. This indicates that a “Immediate effort for 10 billion euros in savings”, he added, in the 8 pm television news on TF1. This new forecast “Stay positive (but) takes into account the new geopolitical context”The Minister of Economy explained, fueling both wars in Ukraine, “Clashes in the Middle East”The “Very Significant Economic Slowdown in China” And “Recession in Germany in 2023”. Paris also maintains its objective of reducing the public deficit to 4.4% of gross domestic product (GDP) in 2024.
Before his announcement, Bruno Le Maire reiterated that the growth objective of 1.4% may be less and less achievable. “I will have the opportunity in the coming days to clarify our economic strategy and our public finance strategy with the President of the Republic and the Prime Minister”He announced on Thursday. “I believe that, over the past seven years, I have always shown clarity and firmness on these subjects. »
The Organization for Economic Co-operation and Development (OECD) is the latest economic group to cut to 0.6% on Monday its estimate of France’s GDP growth for this year. It followed in the footsteps of the International Monetary Fund (IMF), which now reckons on an increase of 1%. The Banque de France forecast 0.9% while a consensus of economists surveyed by the Bloomberg agency expected 0.7%.
The minister assured that the executive would release these billions of euros in savings on state spending. “like seven years” Not to raise taxes. “The French can no longer cope with taxation, we will not raise taxes”He further said that “It’s not social security that we’re going to touch, it’s not the local authorities that we’re going to touch, it’s the state that’s going to try ten billion euros in savings immediately ».
The Minister of Economy detailed where the executive wants to find these ten billion euros. Half will come from a drop in “Operating Expenses of All Ministries”Who therefore have to tighten their budgets“Energy, (of) furniture, (of)Purchases”. “All Ministries shall contribute what they represent to the National Budget”., Mr. Le Maire clarified. The executive wants to recover the remaining five billion euros “Public Policies”especially by reducing “Public development aid amounts to about one billion euros” and another billion, MaPrimeRénov’, a support system for energy saving work.
Mr. Le Maire mentioned a third source of savings: “State administrators, all institutions dependent on the State”, that will do “Contribute to the tune of several million euros, so that state managers can make collective savings of one billion euros”. The Minister of the Economy mentioned the national agency for regional integration, Business France (which helps French companies to internationalize), France Competence (responsible for professional training and apprenticeships) and the National Center for Space Studies.
In 2023, Bruno Le Maire defied the most pessimistic predictions. According to INSEE, growth reached 0.9%, which is very close to its expectation of 1%. But this resistance of the second economic power of the euro zone, still in the context of inflation and strong geopolitical tensions, masks a very different development in GDP: the second quarter in growth (+ 0.7%), the other three are stable.
Recession is natural. Activity has picked up in 2024 due to a rise in interest rates set to tame inflation, but which has weighed on investment by businesses and households. And in Europe, the German neighbor is doing badly. With a significant slowdown in inflation, the mainstay for economic activity lies in a moderate renaissance in household purchasing appetite.
INSEE forecasts growth of 0.2% for each of the first two quarters of 2024. GDP growth of 1.2% would be needed to reach 1.4 in the third quarter and fourth quarter, with growth estimated at 0.5% in mid-year. %, which the Govt had predicted. it is “a lot”We note in the Statistical Institute.
Bruno Le Maire put forward a revised budget proposal in the summer, “Depending on economic circumstances and geopolitical situation”. “All this follows the principle of responsibility: acting at the right time (…) To control our public finances, our deficit and our debt. » Meanwhile, the economy minister wants to believe this “An immediate saving of ten billion for the state, not for the French, not for the local authorities, (but) On State ».
Low growth complicates the difficult exercise of restoring public finances, which the government has declared a priority. Instead of tax increases, it is counting on an activity surplus as well as significant savings to reduce debt by more than 3,000 billion euros and reduce the public deficit to 4.4% of GDP in 2024 (compared to 4.9% expected for 2023). Then below the European limit of 3% in 2027. After the end of extraordinary emergency support this year, the aim is to save at least 12 billion euros per year from 2025.
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