The French government wants to protect citizens from the effects of inflation.
(Photo: REUTERS)
Paris In view of the high energy prices, France will continue to provide billions in aid for households and companies in the coming year. French Finance and Economy Minister Bruno Le Maire said on Monday at the presentation of the 2023 budget law in Paris that it was “the most important and urgent challenge” to alleviate inflationary pressure.
Le Maire spoke of a “responsible budget” that would “protect” the French in times of great economic uncertainty. The impending slump in economic growth should not be exacerbated by austerity policies. At the same time, however, the government is sticking to its roadmap for reducing the budget deficit in the coming years.
Paris wants to cap electricity and energy tariffs for households further in 2023, even if the price increase cap of 15 percent is a little less generous than before. The measure is estimated by the government at 45 billion euros. By skimming off profits from energy companies, the Ultimately, the costs for the state are only 16 billion euros.
The budget law also provides for the defense budget to be increased by three billion euros. Paris also wants to spend more money on the police, the judiciary and education. Taxpayers are to be protected from the effects of cold progression by taking high inflation into account when calculating income tax: the state’s estimated shortfall in revenue is more than six billion euros.
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The French government expects the budget deficit in 2023 to be five percent of gross domestic product (GDP), like this year. However, Paris is based on a comparatively optimistic economic forecast: while experts also believe a recession or at least zero growth is possible in France, the Ministry of Finance is counting on GDP growth of one percent in the coming year. Le Maire was undeterred: “Our economy is more resilient than most economies in the euro zone.”
France wants to reduce the government quota
The finance minister said that other EU countries would also launch new spending programs due to high energy prices. Instead of announcing “an additional 65 billion euros” over the course of the year, Paris made “constant” announcements right from the start – a dig at the federal government’s third relief package, which includes this sum.
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Le Maire reiterated the goal of bringing the French deficit back below the Maastricht mark of three percent of GDP by 2027. Public spending is to be reduced in the future, and the state quota is to drop from the current 58 percent to almost 54 percent.
In addition, President Emmanuel Macron is committed to a pension reform that will come into force by summer 2023. “I am convinced that we can achieve fair and effective reform,” Le Maire said. Macron’s government’s decision on how to proceed with pensions is expected this week.
More: Is Europe on the way to becoming a deindustrialized continent as a result of the energy crisis?