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Recession and excessive budget deficits - that's what Macron has brought France to

17 July 2024 [16:23] - TODAY.AZ
By Day.Az

After seven years of Emmanuel Macron's rule, France was on the verge of self-destruction. Recession and austerity policies are on the agenda. The worst now seems inevitable. For the first time in its history, France will be held accountable for excessive budget deficits by the European Commission, Day.Az reports.

Earlier, the French National Audit Office (Accounts Chamber) reported that the country's budget deficit of 154 billion euros makes the economy "dangerously vulnerable" in the event of a new macroeconomic shock.

While the political impasse caused by the early general elections in France continues, calls for fiscal consolidation are becoming more insistent.

Following the French Central Bank, the National Audit Office, in its report on the state of public finances, also stated that it was "vital" for the country to reduce the budget deficit.

"Due to delays in implementing real structural reforms, recurring (budget) deficits and the cost of public debt, compounded by the severity of these deficits, are becoming increasingly costly," the department's report says.

The report says that such a situation limits the government's ability to invest, "disrupting other spending," and will make the country dangerously vulnerable in the event of a new macroeconomic shock, such as the eurozone debt crisis or the outbreak of the COVID-19 virus.

The National Audit Office report says that France's public financing strategies do not fully take into account the costs associated with environmental protection policies, such as the transition to renewable energy sources, indicating a negative shock to the economy.

On the other hand, the French state budget deficit, which amounted to 125.8 billion euros in 2022, increased to 154 billion euros in 2023. France's budget deficit, which corresponded to 4.8 percent of gross domestic product (GDP) in 2022, increased to 5.5 percent of GDP in 2023.

The country's public debt reached 110.6 percent of GDP last year. The EU Commission expects this figure to rise to 112.4 percent this year and 113.8 percent in 2025.
Meanwhile, on June 19, the Commission of the European Union (EU) warned 7 member countries, including France and Italy, which have the second largest economies in Europe, to start a disciplinary process due to high budget deficits.
On the other hand, international rating agencies Moody's and S&P Global have warned of the negative impact of the impasse on the French economy due to the election results and the fact that coalition governments in the country are largely untested.
In a statement, Moody's said that the grand coalition that will be created after the victory of the New Popular Front in France will complicate the task of decision-making and debt reduction.

The governor of the Bank of France, Francois Villeroy de Gallo, also said that he expects the political impasse that arose in parliament after the early elections to be resolved by September, and warned: "Whatever decision is made, we must reduce the deficit."

The early general elections in France, the first round of which took place on June 30 and the second on July 7, led to the victory of the New Popular Front, formed by 4 left-wing parties.

Following the results of the elections, the left-wing New Popular Front took first place, gaining 178 seats in parliament, followed by Macron's alliance with 163 seats and the far-right National Unity Alliance (RN) with 143 seats.

With such results, none of the parties or alliances has achieved the absolute majority necessary to form a government in parliament, where a total of 577 deputies will sit.
URL: http://www.today.az/news/regions/250761.html

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