French President Emmanuel Macron Continues Push to Lower Taxes Despite Deficit Warnings

“The French president has said he wants to continue lowering taxes for businesses and the middle class, despite recent warnings about the state of public finances”, reports Bloomberg after the publication of an interview with Emmanuel Macron by the daily L’Opinion Sunday May 14. After months of opposition against the pension reform, the head of state wishes to give pledges to the middle classes.

A direction against which the president of the Banque de France, François Villeroy de Galhau, had already warned, recalls the American media.

Nearly 3 trillion euros

Without another source of income to replace these tax cuts, the country’s deficit risks increasing and deepening the French debt, which has been growing for forty years. “After falling from 111.6% of GDP to 109.6% this year, public debt should stabilize around 109.5% of GDP in 2024 and not continue on a downward trajectory”underline Bloomberg.

A question that is all the more thorny as France’s rating was downgraded from AA to AA- at the end of April by the rating agency Fitch. This could have consequences on the capacity to finance public debt which increased during the Covid-19 pandemic to reach nearly 3,000 billion euros at the end of 2022.

Especially since the government could find it difficult to impose its roadmap. “The rating agency insists on the political risk resulting from the [réforme des retraites]which sparked massive protests and fragmented parliament, making it more difficult to gain the support needed for future reforms.”