The French government presented, on Monday 28 September, its draft budget plan for 2021 focused on economic recovery to overcome the Covid-19 pandemic. The objective is to invest massively in the green transition and strengthen competitiveness, in order to return to pre-crisis activity levels by 2022.
With the €100 billion France Relance investment plan, including €37.4 billion from the European Recovery Plan (see EUROPE 12562/12), Paris expects national GDP to rebound by 8% next year, after a historic contraction expected to be around 10% of GDP in 2020.
The French plan provides for a €30 billion investment effort in favour of the environment: energy renovation of public and private buildings, decarbonisation of industry, agroecological transition, development of the green hydrogen sector, growth of the circular economy, green mobility, etc.
“The finance bill presents the environmental impact of all budgetary and fiscal expenditures. France has therefore become the first country in the world to present a green budget”, Finance Minister Bruno Le Maire was pleased to announce.
Maintaining the trajectory of a lasting reduction in taxes and social security contributions, the French government will cut corporate production taxes by €10 billion. The phasing out of the housing tax on principal residences and the gradual reduction in the corporate tax rate will continue.
After flirting once again with the 3% of GDP threshold in 2019, the French public deficit will rise sharply again in 2020, to 10% of GDP, with the increase in public spending and the fall in tax revenues due to the health crisis. In 2021, the French deficit would gradually be reduced to -6.7% of GDP. Stabilised at 98.1% of GDP in 2018 and 2019, the public debt will rise sharply to reach 117.5% of GDP in 2020 and will start a slow decline as early as 2021 to reach 116.2%.
See the French draft budget plan (in French): https://bit.ly/3kR98oq (Original version in French by Mathieu Bion)