France lowers GDP forecast for 2024 and implements austerity measures

Author
Bartlomiej Babecki
19.02.2024
France lowers GDP forecast for 2024 and implements austerity measures
Summary
Table of contents
  • The French government is planning to cut public spending in all ministries and authorities by 10 billion euros.
  • Finance Minister Le Maire assured citizens that there would be no tax increases or cuts to social benefits.
  • France wants to reduce the government deficit to 4.4% of GDP by 2024 and remains open to implementing a supplementary budget if necessary.

France revises GDP forecast for 2024 downwards due to geopolitical uncertainties

French Finance Minister Bruno Le Maire has announced a downward revision of France’s GDP growth forecast for 2024 from 1.4% to 1%, citing a combination of geopolitical tensions and economic slowdowns in key trading partners. Factors contributing to this adjustment include the ongoing conflict in Ukraine and Gaza, maritime disruptions in the Red Sea and a slowdown in economic activity in Germany and China. Le Maire emphasized that while the revised forecast remains positive, it reflects the changing global context, which is prompting the government to take proactive measures to mitigate potential economic challenges.

Austerity measures enforced to offset fiscal pressures

In response to the revised growth outlook, the French government has unveiled plans to cut government spending by €10 billion across all ministries and agencies. Despite these austerity measures, Le Maire assured that there would be no tax increases or cuts in social benefits for citizens. The aim is to maintain budgetary discipline and ensure that France achieves its target of reducing the public deficit to 4.4% of GDP by 2024. In addition, the government is open to implementing a supplementary budget during the year, depending on economic conditions. These measures are in line with recent adjustments made by international bodies, including the European Commission, the OECD and the French statistics agency INSEE, and reflect a cautious approach in the face of the uncertain economic situation around the world.

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