France’s Budget Problems ‘Very Serious,’ Prime Minister Says

Published On Sep 18, 2024, 1:14 PM

The French government's financial situation is critical as it missed a deadline to outline a plan to reduce its debt and deficit, which are among the highest in Europe. The new Prime Minister, Michel Barnier, acknowledged the need for urgent measures to address a budget deficit of €154 billion, over 5% of GDP, and a national debt surpassing €3 trillion (over 110% of GDP). The French Court of Auditors stated that France needs €110 billion in savings to meet EU fiscal targets, with recommendations for significant spending cuts and potentially increasing taxes, contradicting President Macron's previous promises.

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The ongoing fiscal struggles in France could negatively impact investor confidence in the French economy, potentially leading to a decline in investments in French stocks and bonds. Furthermore, if necessary fiscal measures such as tax increases are implemented, this could further dampen economic growth.

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