France’s budgetary crisis is "very serious", Prime Minister Michel Barnier warned on Wednesday in his first public statement since taking office – emphasising the need for a clearer picture of the country's financial health.
Barnier, who stepped into the role earlier this month, acknowledged the gravity of France’s public sector deficit in an interview with the French press agency AFP.
The deficit is projected to hit around 5.6 percent of GDP this year and exceed 6 percent by 2025 – far surpassing the European Union's 3 percent limit.
Although France was this month placed on a formal procedure for violating EU budgetary rules, the Bank of France has warned that meeting the EU deficit limit by 2027 is "not realistic".
Tax hikes?
Barnier, appointed by President Emmanuel Macron after a lengthy political struggle, has suggested possible tax rises to stabilise finances – a proposal Macron has consistently rejected during his presidency.
"I am discovering that the country's budgetary situation is very serious," Barnier said, underscoring the urgent need for "responsible action" beyond mere statements.
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The PM, who has not yet announced his cabinet, will present the 2025 budget to parliament next month, marking a significant early test for his administration.
His scheduled meeting with former prime minister Gabriel Attal was on Wednesday cancelled due to "agenda reasons".
The meeting was intended to clarify the participation of Macron's allies in the new government.
Tensions
Outgoing interior minister Gérald Darmanin has firmly rejected any possibility of tax increases, labelling them as "easy" and vowing he will not join a government with unclear tax policies.
"I do not wish to participate in a government that is not clear" on this issue, Darmanin said.
Further complicating matters, François Villeroy de Galhau, Governor of the Bank of France, warned that completely ruling out tax increases is "not wise" or "realistic" given France's financial difficulties.
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He suggested that while tax increases should avoid impacting the worjking class and small businesses, a targeted effort from large companies or wealthy individuals may be necessary.
Barnier has also faced criticism from within his own ranks.
His failure to form a government quickly and the ongoing debate over tax policy have heightened tensions.
(with newswires)
