PARIS (Reuters) -France can no longer afford to put off belt-tightening efforts as debt payments snowball in the coming years, the independent public audit office said on Thursday.
France’s public finances spiralled out of control last year as a political crisis left four successive governments paralysed and incapable of tackling an unexpected drop in tax income and surge in spending for a second year.
“We can no longer repeat the same errors, and always putting off efforts to rein in the public finances is simply no longer an option,” audit office head Pierre Moscovici told journalists. “If we don’t do it, we will be forced to do it.”
After weeks of delays, France’s latest prime minister, veteran centrist Francois Bayrou, passed the 2025 budget only last week, using special constitutional powers to bypass the deeply divided lower house of parliament, where no party is close to holding a working majority.
“We know the step up is very high, but we are determined to face it,” government spokeswoman Sophie Primas said in reaction to the audit office’s annual report on the public finances.
The finance ministry said it shared many of the audit office’s concerns, including the necessity to deficit-reduction targets over the medium-term.
The 2025 budget aims to cut the public sector deficit to 5.4% of output from 6% in 2024 through savings measures and tax increases, but will still leave France with one of the biggest fiscal shortfalls in the European Union.
“Restoring France’s financial credibility has become an absolute emergency to avoid an uncontrolled increase in debt payments,” the audit office said in the report.
That made it all the more vital to stick to this year’s deficit target as a first step towards bringing the fiscal shortfall in line with an EU limit of 3% of output by 2029, it said, warning that debt payments were on course to rise to 3.2% of GDP by then.
But plans for spending cuts were short on details, even though France would need to slice 110 billion euros from annual spending by 2029 to meet the target, the audit office said.
Unlike other big European countries, France will not be able to bring down its debt burden to pre-pandemic levels by the end of this decade.
(Reporting by Leigh Thomas; additional reporting by Dominique Vidalon; editing by Mark Heinrich and Bernadette Baum)
