Brussels, 01/10/2015 (Agence Europe) - On Wednesday 30 September, the French government unveiled a draft budget for 2016 that complies with the commitments made at European level.
The budget savings and stronger growth (1% of GDP in 2015, followed by 1.5% in 2016) should enable the country to bring its public deficit down below the 3% of GDP level in 2017, along the following trajectory: 3.8% in 2015, 3.3% in 2016 and 2.7% in 2017. The French authorities stress that the last time there was a deficit of 3.3% of GDP, it was in 2008. France's public debt is expected to stabilise in 2016 at 96.5% of GDP, after 96.3% in 2015, before beginning to fall in 2017.
Talks with Europe will take place on the budget efforts in structural terms (in other words, corrected for the economic cycle). French budget forecasts are lower than requested by the Ecofin Council in March when granting France an extra two years (from 2015 to 2017) to bring its deficit back below the 3% of GDP cut-off points (see EUROPE 11271). Paris is considering a 0.5% of GDP budget effort next year, following 0.4% of GDP this year; the Ecofin Council recommends 0.8% of GDP in 2016. Nevertheless, the French authorities feels that Europe would find it difficult to make a greater structural adjustment if the nominal targets are met.
In its draft budget for 2016, France confirms its focus on cutting spending. Implementation of the €50 billion savings plan in 2015 to 2017 will continue with a reduction of €16 billion in 2016 (€5.1 billion from the State, €3.5 billion from local authorities, € 7.4 billion from social security) and €15.4 billion in 2017 (€5.1 billion from the State, €3.7 billion from local authorities and €6.5 billion from social security). Public spending will thus fall from €55.8 billion in 2015 to €55.1 billion in 2016.
European finance minsters will hold an initial discussion on budget policy for 2016 on Monday 5 October at Eurogroup and then on Tuesday 6 October at the Ecofin Council. Member states have until 15 October to submit to the European Commission their draft budgets for 2016. (Original version in French by Mathieu Bion)