France to cut government spending by 4.2 billion euros next year: minister
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THE French government expects to spend 4.2 billion euros (S$6.2 billion) less in 2024 as it scales back massive consumer subsidies on fuel and electricity, according to first Budget estimates sent to parliamentarians.
“For the first time in almost a decade, spending will decrease when compared to the previous year: 4.2 billion euros down”, Budget Minister Gabriel Attal told paper Les Echos on Sunday (Jul 16).
This would translate into a 3.5 per cent year-on-year decrease when adjusted for inflation, he said.
In its effort to shield consumers from soaring energy bills that first occurred in the middle of President Emmanuel Macron’s 2022 re-election campaign, the government had put in place massive schemes to subsidise pump and electricity prices.
As energy prices have started to ease again, those measures will be phased out in the course of the next months, resulting in reduced spending of close to 14 billion euros next year, according to Attal.
“We are ending the exceptional crisis spending and are making savings, to finance the green transition,” Attal said.
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Macron’s government has come under pressure to bring its finances into balance after Fitch in April cut its rating to AA- over concerns about potential political paralysis and social unrest, after a recent unpopular pension reform was passed.
Rival agency S&P in June spared France the embarrassment of downgrading the country’s sovereign debt, but remained cautious about the outlook on account of strained public finances.
Excessive spending has become an even more pressing issue as sovereign borrowing costs have been rising considerably, as many of the world’s main central banks embarked on a journey of interest rate hikes in their fights against inflation.
Finance Minister Bruno Le Maire has asked each ministry to identify cutbacks worth 5 per cent of their budget.
A finance ministry source said on Sunday that France’s debt reduction would be achieved through various means, including savings in employment and housing policies. REUTERS
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