With its economic growth forecasts cut from 1.4 to one per cent this year, France’s Finance Minister Bruno Le Maire has prescribed new tough medicine -– immediate cuts in spending of some €10 billion, to be enacted by decree to avoid a parliamentary confrontation. The cuts, he insists, are necessary to reduce the budget deficit this year to 4.4 per cent.
France remains, however, even after the latest cuts, the least likely of the four biggest euro zone economies to meet the EU’s newly-agreed annual targets for public debt and deficits.
He promises that spending on healthcare and local governments will be protected and that taxes will not rise, so half of the ¤10 billion will come from ministries trimming hiring, procurement, and administration, with the balance from scaling back green programmes, including home renovation subsidies and cutting international aid.
Le Maire’s announcement comes as bad news for President Emmanuel Macron, who is struggling to reboot his second term in the face of the continuing rise of far right Marine Le Pen’s Rassemblement National. Last month he sought to invigorate his government with the nomination of a new cabinet headed by his 34-year-old protégé, Gabriel Attal, and spoke of what he called the civic and economic “rearmament” of France. He has promised more of the pro-business measures that have defined his presidency since 2017 and a new push to clean up the public finances.
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Macron will find it difficult to convince disgruntled voters that it’s not just more of the same, not least because his government no longer commands a majority in the Assemble National and finds it difficult to enact its policies. Public resistance to structural reform is as entrenched as ever and the government was forced only this month to make €400 million in concessions to demonstrating farmers threatening to blockade Paris. Le Pen’s party has now opened up a 10-point polling lead on Macron’s centrist alliance. The European Parliament elections could be torrid for the government parties.