The Brief – France still has no prime minister, but it does have a huge deficit

France remains without a government nearly two months after the second round of snap legislative elections, leaving outgoing ministers scrambling to manage current affairs. Meanwhile, economic forecasts are rapidly deteriorating, putting France in an embarrassing and potentially dangerous situation.

So precarious that the executive who is to take over the reins of the country in a few days has to most likely make some painful choices, as a matter of urgency. According to the draft budget drawn up this summer, allocations to ministries have already been frozen at €492 billion.

According to a note sent on 2 September by Bruno Le Maire, the resigning minister for the economy, the public accounts deficit is expected to reach 5.6% of GDP in 2024. Just a few weeks ago, the projections were for 5.1%, and last spring for 4.9%, after peaking at 5.5% last year.

For the Ministry of Finance, this is due to “the extremely rapid increase in local authority spending,” particularly that of communes and departments, which could worsen public accounts, in addition to an expected fall in tax revenues, despite GDP growth estimated at 1.1% in 2024.

This will further weaken French President Emmanuel Macron’s political legacy. Le Maire explained this summer that his objective was to bring France’s deficit below 3% by 2027, to comply with the requirements of the EU’s Stability Pact.

“They give economic lessons to the whole world and accuse us of wanting to impoverish France. But they are driving the country into the wall,“ said Manuel Bompard, coordinator of the far-left France Insoumise party (LFI), on X. Emmanuel Macron constantly repeats that he has no intention of raising taxes, contrary to the plans of the left-wing parties.

The European Commission, on 26 July, placed France under the excessive deficit procedure, and Paris must, in theory, present a four-year plan to reduce its public deficits by 20 September.

Of course, this deadline will be impossible to meet, as the office of the resigning prime minister is considering postponing tabling the Finance Bill before the National Assembly.

This was theoretically scheduled for 1 October, and could now be presented in the middle of next month. This would be an unprecedented decision.

While the deadline may seem distant, the problems are closer than ever as Emmanuel Macron continues his consultations to appoint a new prime minister.

The Roundup

Greece’s main opposition leftist Syriza party should end its internal divisions and take initiatives to speak to other progressive forces, EU lawmaker Nikolas Farantouris told Euractiv, adding that he stands ready to claim the party’s leadership.

As the Russia-friendly and left-populist BSW party has become the king-maker in Eastern Germany, the country’s vocal Ukraine backers appear poised to make concessions and tone down their rhetoric to form stable governments.

EU chief Ursula von der Leyen has made her first picks for her top team, with the key economy vice-president job going to Italy’s far-right nominee, German newspaper Die Welt reported Tuesday (3 September).

Delays in the disbursement of the European Union’s multibillion-euro COVID-19 recovery fund are severely hampering member states’ ability to rebound from the pandemic, according to a study released on Monday (2 September) by the European Court of Auditors (ECA).

Civil society organisations demanded comprehensive legislation banning spyware throughout the EU, citing widespread misuse and insufficient regulation, in a joint statement on Tuesday (3 September).

Look out for…

European Policy Centre holds an event titled The future of EU democracy in a new institutional cycle in Brussels.
The Informal meeting of the General Affairs Council continues for a second day in Budapest, Hungary.
European Commissioner for Agriculture, Janusz Wojciechowsk, is attending the 21st International Dairy Community Forum, in Bialystok, Poland.
European Commissioner for Neighbourhood and Enlargement, Olivér Várhelyi, meets with North Macedonia Minister of European Affairs, Orhan Murtezani.
Várhelyi will meet the French President’s special envoy for aid and reconstruction in Ukraine, Pierre Heilbronn.
European Commissioner Innovation, Research, Culture, Education and Youth, Iliana Ivanova meets the President of the European Court of Auditors, Tony Murphy.