French PM sticks to 2027 deficit reduction goal

France’s prime minister said his country still aimed to reduce its deficit to below three percent of gross national product by 2027, hours after a rating’s agency warned this would be tough. “Yes, we are keeping the goal of bringing the deficit below three percent in 2027,” Gabriel Attal said during the evening news on the TF1 television channel. He spoke after official figures on Tuesday showed that France’s budget deficit overshot forecasts in 2023, undermining President Emmanuel Macron’s pledge to bring national finances back on track within the next four years. The public deficit jumped to 5.5 percent of GDP last year, statistics agency INSEE said.

The Moody’s ratings agency on Wednesday warned that France was “unlikely” to succeed in bringing its budget deficit down to its target of 2.7 percent of GDP by 2027 - even with extra budget cuts. The “2023 deficit makes it unlikely that the government will succeed in reducing the deficit to 2.7 percent of GDP by 2027, as outlined in its medium-term fiscal plan presented in September,” said Sarah Carlson of Moody’s Ratings. “The latest data point to somewhat higher debt for longer than we previously expected,” she said. “The deficit shortfall highlights the inherent risks in the government’s medium-term fiscal strategy, which is based on optimistic economic and revenue assumptions and unprecedented restraints on expenditure,” Moody’s said.

France has announced 10 billion euros of spending cuts to meet this year’s deficit target of 4.4 percent of GDP. But even eliminating extraordinary support measures and the 10 billion euros in additional savings were “unlikely to allow the government to meet its fiscal target of 4.4 percent of GDP this year,” Moody’s added.

The government is looking to slash even more spending next year. Attal said Wednesday he was hoping to restart talks on reducing how long people receive unemployment benefits. “My aim is not to go after a particular individual or unemployed people, but to shake up a system to better encourage a return to work,” he said.