SHARE
COPY LINK

ECONOMY

Accounts watchdog warns about state of France’s finances

France's public accounts watchdog on Wednesday warned about the state of the country's finances, which have deteriorated dramatically in the last two years due to a massive Covid-19 rescue package, tax cuts and spending commitments.

Accounts watchdog warns about state of France's finances
French Cour des comptes President Pierre Moscovici addresses a press conference after the publication of the annual financial report on the French Presidency Budget. Photo by STEPHANE DE SAKUTIN / AFP

The influential Cour des comptes, which acts as a state auditor, forecast in its annual report that public debt would increase by €560 billion between the end of 2019 and the end of 2022.

Most of the rise – which will take total debt to an equivalent of 113 percent of GDP – was down to Covid-19 after President Emmanuel Macron promised to spend “whatever it costs” to save the economy.

“This considerable effort will weigh long-term on the deficit and public debt, the reduction of which will require unprecedented efforts to control public spending,” the watchdog said.

The rescue package and other state spending had left France with some of the most unbalanced public accounts among the 19 EU countries that use the euro, the Cour des comptes said.

According to its calculations, only Italy was worse off than France, which was in a similar position to Belgium and Spain.

France is “among the group of countries in the eurozone, two years after the start of the Covid-19 pandemic, where the public finances have deteriorated the most,” it said.

Even with strong economic growth of 7.0 percent last year and an estimated 4.0 percent in 2022, the watchdog warned that France risked running large and unsustainable deficits.

It forecast a deficit of 5.0 percent of GDP this year “of a completely structural nature” – meaning that it was due to permanent over-spending, rather than one-off outlays linked to Covid-19.

The auditor cited “significant” tax cuts announced by Macron that would come into force in 2022, as well as extra spending commitments, including permanent additional funding for the health system.

The findings come at a highly sensitive moment as France gears up for presidential elections in April.

Macron, who is shown by polls as the front-runner, came into power in 2017 promising to balance France’s accounts after decades of over-spending.

His first prime minister, Edouard Philippe, called the country’s debt level “intolerable” in 2017, adding that “we are dancing on a volcano that is rumbling ever louder.

Macron is pushing for a permanent loosening of public spending rules for the eurozone that are meant to restrict states to running annual deficits below 3.0 percent of GDP.

After announcing massive public investments in strategic industries of the future under his so-called “France 2030” plan, he is seeking to persuade fellow members in the bloc to follow suit.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

POLITICS

Prosecutors: No new rape inquiry for France’s disabilities minister

France's disabilities minister will not face a new inquiry "as things stand" over a rape allegation that surfaced just after his nomination by President Emmanuel Macron last week, prosecutors have said, citing the anonymity of the alleged victim.

Prosecutors: No new rape inquiry for France's disabilities minister

Damien Abad has faced growing pressure to resign after the news website Mediapart reported the assault claims by two women dating from over a decade ago, which he has denied.

One of the women, identified only by her first name, Margaux, filed a rape complaint in 2017 that was later dismissed by prosecutors.

The other woman, known only as Chloe, told Mediapart that in 2010 she had blacked out after accepting a glass of champagne from Abad at a bar in Paris, and woke up in her underwear in pain with him in a hotel room. She believes she may have been drugged.

She did not file an official complaint, but the Paris prosecutors’ office said it was looking into the case after being informed by the Observatory of Sexist and Sexual Violence in Politics, a group formed by members of France’s MeToo movement.

“As things stand, the Paris prosecutors’ office is not following up on the letter” from the observatory, it said, citing “the inability to identify the victim of the alleged acts and therefore the impossibility of proceeding to a hearing.”

In cases of sexual assault against adults, Paris prosecutors can open an inquiry only if an official complaint is made, meaning the victim must give their identity.

Abad has rejected the calls to resign in order to ensure the new government’s “exemplarity,” saying that he is innocent and that his own condition of arthrogryposis, which limits the movement of his joints, means sexual relations can occur only with the help of a partner.

The appointment of Abad as minister for solidarities and people with disabilities in a reshuffle last Friday was seen as a major coup for Macron, as the 42-year-old had defected from the right-wing opposition.

The new prime minister, Elisabeth Borne, said she was unaware of the allegations before Abad’s nomination, but insisted that “If there is new information, if a new complaint is filed, we will draw all the consequences.”

The claims could loom large over parliamentary elections next month, when Macron is hoping to secure a solid majority for his reformist agenda. Abad will be standing for re-election in the Ain department north of Lyon.

SHOW COMMENTS