By Leigh Thomas
PARIS (RockedBuzz via Reuters) – The French government aims to save 16 billion euros ($17 billion) from the 2024 budget, Finance Minister Bruno Le Maire said on Thursday, downgrading France’s growth prospects.
Le Maire said 10 billion euros in savings would come from the abolition of electricity and gas price caps, put in place to ease the pain for families resulting from Europe’s energy price crisis.
The rest would come from a 4.5 billion euro reduction in state aid to businesses, as well as lower spending on labor market support measures and unemployment benefits.
The government has already cut spending this year by 5 billion euros and further cuts next year will be needed to keep on track its deficit reduction plans, which aim to reduce the fiscal deficit from 4.9% of GDP this year to 2.7% in 2027.
Complicating this task, the euro zone’s second-largest economy is expected to grow slightly slower next year than previously expected, Le Maire said as he outlined key economic forecasts for the 2024 budget bill to be tabled at the end of the month.
“Germany’s recession, China’s difficulties and high interest rates will impact growth in 2024,” he told reporters, cutting his forecast from 1.6% to 1.4%.
This still remains better than the 1% expected this year.
Le Maire said the inflationary shock over the past year will ease further, boosting household consumption, the traditional driver of French economic growth.
He said French inflation was expected to fall from 4.9% this year to 2.6% in 2024, moving closer to the European Central Bank’s target and offering relief to consumers.
While the government aims to cut spending, it would still increase some spending, with an extra €4 billion going to the Home Office and the armed forces.
Another 7 billion euros has been earmarked for environmentally friendly investments which will be unveiled later this month and financed by removing some of the tax breaks some industries get on the use of fossil fuels.
However, any additional revenue into state coffers from a planned reduction in diesel fuel tax breaks for farmers and builders between 2024 and 2030 would be used to help them start using biofuels, Le Maire said.
($1 = 0.9381 euros)
(Reporting by Leigh Thomas; Editing by David Holmes)