French deficit and public debt will reach new records in 2015

[Parti socialiste/Flickr]

Finance Minister Michel Sapin has announced a three year austerity programme. [Parti socialiste/Flickr]

Despite planned cuts of 50 billion euros over three years, France will face a deficit of 95 billion euros in 2015. EURACTIV France reports.

France’s finance minister presented his draft budget for 2015 on Wednesday 1 October, in which he already anticipates a deficit of 4.4% of GDP. With GDP expected to reach €2179 billion in 2015, according to government estimates, the budget deficit and public debt will reach record levels of €95 billion and 2091 billion euros respectively.

Government spending cuts

Social protection will bear the brunt of spending cuts in the coming years, the draft budget for 2015 reveals. The French government hopes to make savings of €20 billion in the sector by 2017, a large proportion of the 50 billion euros promised in the cuts programme.

According to a document from the French Ministry for the Economy and Finance, social programs will contribute €9.6 billion to the €21 billion of cuts planned for 2015, followed by the state’s institutions and its agencies (€7.7 billion) and local authorities (€3.7 billion).

Between 2015-2017, the proposed saving of 20 billion euros on social protection will be complemented by cuts of €19 billion to the budgets of state institutions and agencies, and 11 billion to local authorities.

Reductions in health insurance spending will account for 3.2 billion euros of the savings for 2015, as laid out in the social protection finance bill (PLFSS), which will be presented to the Council of Ministers on 8 October.

The French government plans to make total savings of €10 billion on health insurance from 2015 to 2017.

Racking up debts

Michel Sapin, the Minister for Finance, commented on the question of France’s public debt, which today stands at €2000 billio, not far off 95.3% of GDP. He pointed out the fact that half of this debt was accumulated between 2002 and 2012, laying the blame with his predecessors.

Government estimates show the debt reaching 97.2% of GDP in 2015, and even touching 98% in 2016, before beginning to fall.

These grim statistics will not make it easy for Pierre Moscovici, the French Commissioner, during his European Parliament hearing on Thursday 2 October.

>>Read: ?Public debt plan gaining momentum

France's deficit is fast becoming the number one problem of the Eurozone. While many countries have tightened their belts by laying off civil servants and cutting pay, France has done neither. The country's public deficit remains very large, and the lack of economic growth leaves a diminished tax base.

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