France’s 2025 budget targets savings of 50 billion euros, the finance minister told Reuters
PARIS (Reuters) – France’s new government aims to save around 50 billion euros ($52 billion) from the 2025 budget, Finance Minister Eric Lombard said on Monday, setting a lower target than his predecessor.
Lombard said an easier belt-tightening was needed to preserve economic growth, adding that the budget bill currently being drafted would target a deficit in the range of 5.0 to 5.5 percent of gross domestic product (GDP).
The previous government, which fell last month after opposition parties rejected part of its 2025 budget, had hoped to reduce the deficit to 5 percent this year from 6.1 percent in 2024.
“We have to support the economy. I’m thinking about companies that lack confidence, we can’t stop growth,” Lombard told France Inter radio.
Lombard began consultations with opposition parties on Monday in a bid to preemptively win support before proposing a new budget law in the hope of avoiding a no-confidence vote like the one that toppled the previous government in early December amid backlash over its belt-tightening proposals.
France’s failure to pass a 2025 budget spooked investors and rating agencies, but the savings needed to get France’s public finances in order proved too much for lawmakers in a deeply divided parliament. The previous government led by Michel Barnier aimed to save a total of 60 billion euros.
In order to pass its budget, the new government will likely need the support of the Socialists in particular, who favor higher taxes on the rich and big companies.
Lombard said the new bill would not create new taxes that were not already in the failed budget, but would rework a planned additional tax on France’s largest companies with the goal of bringing in about 8 billion euros, as well as tax increases for the wealthiest taxpayers.
He added that he was open to increasing the 30 percent flat tax on capital gains and income introduced by President Emmanuel Macron in 2018 to make France more attractive to global investors. The flat tax has fueled criticism of Macron as a president for the rich.
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