FRENCH finance minister Bruno Le Maire said the government had lowered its forecast for 2024 GDP growth to 1 per cent from 1.4 per cent as war in Ukraine and Gaza and a slowdown at top trading partners Germany and China darkened the outlook.

In an interview with French television TF1, he also said that state spending would be cut by 10 billion euros (S$14.5 billion) across all departments and agencies.

“It is a growth forecast that remains positive, but takes into account the new geopolitical context,” Le Maire said, citing the war in Ukraine and the Middle East, problems with maritime transport in the Red Sea, and the economic slowdown in China and Germany.

He added that there would be no tax increases and no cuts in social security payments to citizens, but stressed that all government ministries and agencies would contribute to the spending cuts.

“We will immediately cut, in the coming days, ten billion euros in state expenditures,” he said.

He said there would be five billion euros in operating expenses cuts for all ministries and another five billion in public policies, notably one billion in public aid for development, and one billion euros on residential building renovation subsidies.

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Another billion will be shaved off the budgets of state operators such as export agency Business France and the ANCT agency (Agence Nationale de la Ccohésion des Territoires) for regional government policies.

Le Maire also said the government would make sure that France remained on track to respect its target of reducing the 2024 state deficit to 4.4 per cent of GDP.

“We are keeping the option of implementing a supplementary budget in the summer, depending on economic circumstances and the political situation,” he said.

The government aims to gradually cut the fiscal shortfall in coming years until it falls below an EU ceiling of 3 per cent in 2027.

The new government forecast is more in line with a series of recent growth outlook downgrades by the European Commission, the OECD and French statistics agency INSEE.

The European Commission on Feb 15 cut its 2024 GDP growth forecast for France to 0.9 per cent from the 1.2 per cent seen in November, and it cut its forecast for Germany to 0.3 per cent from 0.8 per cent.

Earlier this month, the OECD cut its 2024 French growth forecast to 0.6 per cent from 0.8 per cent previously.

France’s statistics agency INSEE on Feb 7 forecast quarter-on-quarter growth of just 0.2 per cent in the first and second quarters.

The French economy grew 0.9 per cent in 2023, compared with 2.5 per cent in 2022 and a 6.4 per cent post-Covid spurt in 2021. REUTERS