Heavily indebted France has been given the green light by the Council of the European Union for its plans to gradually reduce its significant deficit.
The body of the governments of the EU member states, which met in Brussels on Tuesday, followed a recommendation from the European Commission to approve the budget.
The plan foresees that the new debt will gradually fall to the prescribed limit of 3% of economic output by 2029.
This year, the new government in Paris is initially targeting a deficit ratio of 5.4%, after the previous government of former EU Commissioner Michel Barnier was toppled by the opposition in a dispute over a more ambitious austerity budget.
As a result, France does not yet have a budget for the current year – and it is still unclear what austerity measures new Prime Minister François Bayrou will be able to push through the divided parliament.
French Finance Minister Éric Lombard thanked his EU colleagues and the European Commission. “We cannot leave such debts and deficits to our children and grandchildren,” he said.
With a debt ratio of almost 110% of economic output in 2023, France is one of the worst performing EU countries, according to the EU statistical agency Eurostat. Only Greece (163.9%) and Italy (134.8%) have a higher debt burden.
France is the EU’s second largest economy after Germany. The union’s rules on public debt and deficits stipulate that a member state’s debt level cannot exceed 60% of economic output.
At the same time, the government deficit – the difference between the government budget’s income and expenditure, which should be covered mainly by loans – must be kept below 3% of gross domestic product.
