France is grappling with fiscal challenges, as it plans to meet the EU deficit limit by 2029, marking a two-year delay from earlier targets. The new Finance Minister, Antoine Armand, announced this timeline while emphasizing efforts to gradually reduce the budget deficit to below three percent of GDP. This comes amidst the EU's initiation of a deficit procedure against France, due to its current deficit of 6.1 percent.
To address these challenges, Prime Minister Barnier has proposed a series of austerity measures and tax increases. The proposed budget plan aims to cut 60 billion euros, primarily through spending reductions and increased taxes on businesses and the wealthy. Despite these measures, key areas like defense, education, and health are exempt from cuts. The plan has sparked criticism from political figures, including Marine Le Pen, and faces a potential no-confidence vote.
France's struggle with meeting EU fiscal rules is part of broader financial concerns within the Eurozone. Recent reforms to the Stability and Growth Pact aim to consider the unique fiscal challenges of individual countries, including high defense expenditures due to geopolitical tensions. Meanwhile, Germany has pushed for strict debt reduction targets.
These fiscal debates are not isolated to France. Spain, for instance, has postponed its economic plan submission to the EU due to budgetary disagreements, potentially leading to a continuation of the current fiscal framework. As countries navigate these financial complexities, the EU's fiscal landscape remains in a state of negotiation and adjustment.
