Economy: Could the public deficit in France be a time bomb?

The latest alarming figures on the French public deficit sound a warning bell. Indeed, this growing budgetary abyss threatens to undermine economic recovery efforts. As a result, bold measures are essential to defuse this ticking time bomb.

An unchecked deficit, a jeopardized economic future

The specter of a public deficit of 5.6% of the GDP in 2024 looms, a worrisome figure with potentially disastrous consequences. According to the strict Maastricht criteria governing the eurozone, such a level would be considered excessive, threatening economic stability. France would thus cross a red line by dangerously veering away from the 3% limit set by European treaties. This drift would severely compromise its credibility and word within the Union, where countries must imperatively respect common budgetary discipline.

Moreover, this trajectory of runaway deficit now seems unsustainable and calls into question the firm commitments made by President Macron. Determined to rectify public finances, he had committed unequivocally to bringing the deficit below the 3% mark before 2027, a reassuring promise for the electorate. However, the global inflation surge and the economic shock of the war in Ukraine have derailed these initial ambitions. Given the rapid deterioration of the macroeconomic context, the goal of a quick return below 3% today seems unattainable, threatening the president’s word.

Deep-rooted causes, a complex solution

The deep-seated causes of this budgetary crisis go back decades. On one hand, the 2007 subprime crisis had caused the deficit to skyrocket to 7%. On the other hand, the Yellow Vest movement in 2018 had also deepened deficits. Then, the Covid-19 pandemic in 2020 dealt a nearly fatal blow to public finances, with the deficit nearing 9%, a historic level. Nonetheless, these successive crises should not excuse the current inaction. On the contrary, they highlight the urgency of a comprehensive and ambitious economic strategy.

In spite of these major crises, President Macron had committed to right the ship during his second term, by bringing the deficit below 3% by 2027 as required by European rules. But rampant inflation and the war in Ukraine have derailed these ambitions to restore public accounts. These repeated shocks now underscore the urgency of a true overall economic strategy to sustainably clean up the state’s finances.

It is high time to face this worrying economic reality. Admittedly, the task will be daunting, but inaction would have catastrophic consequences. Therefore, political decision makers must demonstrate courage and vision. Only a comprehensive approach, combining structural reforms and rigorous budget management, can defuse this economic time bomb. The future of France depends on it.