A “major effort” of budgetary consolidation is necessary in France “starting next year,” estimated this Tuesday the chief economist of the International Monetary Fund (IMF), Pierre-Olivier Gourinchas, for whom the current budgetary trajectory is not “not desirable.” “.
France’s public deficit has increased this year, despite the end of the “whatever it takes” implemented with the Covid-19 pandemic and the support measures launched after the Russian invasion of Ukraine, in early 2022, and has significantly decreased. compared to forecasts. This is due, in particular, to lower than expected tax revenues.
“There will surely be a slowdown in the economy”
“It is normal and desirable that there should be a consolidation of public accounts in France,” stressed the IMF chief economist, “to demonstrate that, decisively, the trajectory of public finances will once again be sustainable.” However, it must be done “credibly and over a certain period of time, so as not to immediately kill growth,” he warned. However, “there will surely be a slowdown in the economy that will be linked to consolidation,” although he considers this “sacrifice” necessary.
Without “dispensing with reforms that support growth, a growth of 1.1% is not enough,” warned Pierre-Olivier Gourinchas, who calls for measures that allow “a little more sustained growth” and above all not to “sacrifice investments to the future.” .
As deputies begin to examine the draft budget for 2025, the French Observatory of Economic Conditions (OFCE) has highlighted the negative impact on activity of the measures planned to reduce spending and increase taxes within the framework of the recovery of public finances. Although the Government is committed to reducing the public deficit from 6.1% of GDP in 2024 to 5% in 2025, the institute emphasizes that efforts to restore public finances will reduce growth by 0.8 points of GDP.
Source: BFM TV
