On Tuesday 4 July, the French Prime Minister, Édouard Philippe, reiterated his government's commitment to bring the national public deficit below 3% of GDP in 2017, but declined to specify the nature of the measures, equivalent to €4 to €5 billion, that will be needed to achieve this (see EUROPE 11820).
“France is on the ropes and it will take more than a dodge to save us”, he told the National Assembly, according to the daily newspaper Le Monde (our translation). Pledging to put an end to the “French addiction to public spending”, he set an objective of bringing expenditure to below 50% of GDP by the end of the five-year term in office of Emmanuel Macron. This will be done by stabilising public spending in volume terms from 2018. He warned that “we will have to make choices and call certain missions into question. No ministry, no mission, no tax niche will be ringfenced”.
Philippe announced that several fiscal measures were to be postponed, whilst promising that French taxpayers would not be the budget's adjustment variable. Giving priority to cutting salary contributions from 2018, he said that the wealth tax reform would not apply before 2019 and that the residence tax reform would be fully up and running two years later than anticipated, in 2022. The cost of a packet of cigarettes will eventually rise from €7 to €10, a measure expected to earn €5 billion, and the entry into force of a carbon tax will be anticipated. However, an investment plan with a price tag of €50 billion will be maintained. (Original version in French by Mathieu Bion)