France must not relax deficit target, says finance minister

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PARIS (Reuters) – France should stick to the outgoing government’s 2024 deficit reduction target despite the risk of weaker than expected tax revenue, Finance Minister Bruno Le Maire told lawmakers on Monday.

France’s deteriorating public finances will be a major challenge for new Prime Minister Michel Barnier who faces tough choices to cut spending, raise taxes or lose credibility with EU partners and financial markets.

“We can and should stick to a deficit (target) of 5.1% (of GDP) in 2024, it is within our reach,” Le Maire said in a final appearance before the lower house of parliament finance commission.

“We cannot allow ourselves to fall behind the rest of the European Union.”

Le Maire said France needed an urgent amendment to the 2024 budget to legislate for a tax hike on energy companies’ superprofits and a levy on corporate share buybacks.

He added that the next government, which is required by law to hand a 2025 budget bill to lawmakers by Oct. 1, should cancel outright some of the 16.7 billion euros in spending allocations already frozen this year.