If France fails to keep its deficit below the 3% of GDP ceiling for 2017 and 2018, it will not be able to remove itself from the excessive deficit procedure next year.
Effectively the draft of 2018 budget presented by Bercy risks non-compliance with the European budgetary rules.
According to the 1992 Maastricht Treaty and the introduction of Monetary Economic Union, signatory countries must comply with a rule that the general government deficit must not exceed 3% of the GDP.
As promised, the government is still hoping to meet its target of reducing it to 2.9% of GDP from 3.4% in 2017. But this is done with painful adjustments in public expenditure, such as the 5 euro decrease in personal housing allowance and includes the financing of the overruns of French soldiers’ external operations in the army budget.
When he arrived to the financial ministry, Bruno Le Maire had to raise the bar after the Court of Auditors revealed an underestimation of public spending in the budget of the previous government under François Hollande.
This new complication will have an impact on the popularity of the French president, which has been in continuous decline since his election in May 2017.
Julien Moreau, IEJ 3F-G1