With the gradual introduction of the revised Stability Pact from 2025, the most heavily indebted countries in the euro area, such as France, will not escape fiscal consolidation, according to the European Commission on Monday 15 July.
“It is clear that a fiscal adjustment in France and in other countries (of the European Union) is necessary”, said the European Commissioner for Economic Affairs, Paolo Gentiloni, on his arrival at the Eurogroup. He considered that, for France, the path for consolidating public finances, which is currently being discussed at technical level, is “very realistic”. “This is not something that will force the countries concerned to do impossible things”, he added.
The Member States are currently negotiating their fiscal adjustment path with the European Commission as part of the macro-fiscal plans (4 to 7 years depending on the scale of the reforms and investments planned) which they will submit to the Commission by the end of September and which they will apply from 2025. This explains why the excessive deficit procedures to be opened against seven Member States (Belgium, France, Italy, Hungary, Malta, Poland and Slovakia) on Tuesday 16 July do not contain a recommendation from the Commission on a specific numerical path.
Attending his most recent meetings of the Eurogroup and the Ecofin Council, the French Finance Minister, Bruno Le Maire, warned any future French government on Monday morning against the temptation to deviate from the pre-determined path designed to reduce the national deficit to below 3% of GDP by 2027 (see EUROPE 13401/23). In his view, savings of €25 billion are needed by 2024 to reduce France’s deficit from 5.5% to 5.1% of GDP.
The future government will have to confirm whether it wants to stay within the constraints of the Pact, my recommendation being “not to deviate from this trajectory”, stressed Mr Le Maire.
On his arrival in Brussels, the German Finance Minister, Christian Lindner, said he expected every Member State to comply with the common fiscal rules. “Any future French government will also have to respect these rules”, he said.
On Monday, the Eurogroup recommended a restrictive fiscal stance for 2025 at euro area level (see other news). (Original version in French by Mathieu Bion)