France has reached its “high alert” on public finances, said Economy Minister Bruno Le Maire on Monday, June 27, as the executive seeks a compromise with the opposition for its bill on purchasing power.
“Everything is not possible, simply because we have reached the alert level on public finances”, affirmed Mr. Le Maire, adding that “the financing conditions have changed” and that today the France borrows “at more than 2%” to finance public spending, when it did so recently at negative or very low rates.
Asked about the proposal made by several opposition parties, such as Les Républicains or the Rassemblement national, for a reduction in fuel tax, Mr. Le Maire assured that the government would “discuss” with these formations but that ” the spirit of compromise must be accompanied by a spirit of decision”.
“When inflation increases, the debt burden also increases by several billion euros, and my responsibility as Minister of Finance, I want everyone to hear, is to return to balanced public finances by 2027” , he insisted, in a message to the deputies of the oppositions as to the framework of the debates that the executive wishes to impose on the National Assembly.
For its part, the government will propose in its future bill on purchasing power the increase, retroactive to July 1, of 4% of several social benefits to fight against inflation. According to information from Le Monde, this is a budgetary effort of around 6.5 billion euros in 2022, and nearly 1.5 billion in the 2023 financial year. will be devoted to the increase in pensions paid by the basic schemes, its cost being around 5 billion euros for 2022. The project does not contain the thawing of the index point for civil servants, also announced by the government.
“It is imperative to reduce public debt”
According to the National Institute of Statistics and Economic Studies (Insee), French public debt exceeded 2,900 billion euros at the end of the third quarter, or 114.5% of gross domestic product (GDP), due to also from sluggish economic growth. It is not this amount that “concerns” Mr. Le Maire, but the fact that “the financing conditions have changed” for France, with the rise in interest rates which has begun and will continue, the Bank European Central seeking to reduce inflation.
“Part of the debt burden is indexed to inflation,” the minister recalled, which represents “several billion euros” additional to spend to repay this charge each year. “Politics is about choices (…) It is imperative to reduce public debt”, but “we must at the same time protect our compatriots who are the most fragile, but protect them responsibly. »
On the right, the new president of the Les Républicains group in the National Assembly, Olivier Marleix, strongly insisted on the risk of an increase in the French debt, Monday morning on Europe 1, a few minutes before Mr. The mayor. “On the question of purchasing power and such a problem for our compatriots, obviously we will do everything to converge with the government” and “move forward on these measures”, declared the deputy of Eure-et-Loire then that the Republicans, if they refuse to participate in the government, ensure that they will possibly vote on texts “on a case-by-case basis”.
Mr. Marleix, however, laid down two conditions: the need to take into account the fact that the question of purchasing power is “a major subject for working France”, and “obviously the government will have to agree to consider the question of the financing of these measures”.
“We will be demanding of the government to have it funded. The French debt situation today is very serious (…) The government cannot say: “Come on, 30 billion more debt!” It would be irresponsible, “he said, promising that LR deputies “will make proposals on the subject of financing”.
On the left, the deputy and national secretary of the French Communist Party, Fabien Roussel, wished on CNews “a sharp increase in purchasing power” with in particular “an immediate reduction in VAT on gasoline”. “We will not settle for crumbs” and “we will all take to the streets if necessary to obtain these measures”, he warned.