Bruno Le Maire Outlines Plan to Save 10 Billion Euros

The State has entered a period of lean times, moving away from the “whatever it takes” approach and expensive measures. Bruno Le Maire, the Minister of Economy and Finance, recently outlined a plan to save 10 billion euros, a necessary step to reduce the public deficit to 4.4% of GDP in 2024. This goal was set and has been maintained by the government, despite the increase in debt brought on by the “whatever it takes” approach, which continues to burden France’s budget due to rising interest rates.

Bruno Le Maire noted that growth is slowing worldwide, especially in Europe. He stated that growth would be revised from 1.4% down to 1% for 2024. With less growth, there will be less tax revenue, making savings necessary.

Fewer credits for ministries

The Minister of the Economy, along with the President of the Republic and the Prime Minister, agreed that the effort should not fall on households through increased taxes. Instead, the State should take responsibility for making savings. This sentiment was echoed by Prime Minister Gabriel Attal’s team.

The two men met four times this week to decide on the economic measures they would announce and how to communicate the political message. They chose to make immediate and massive expense cuts. This is seen as a courageous and responsible path, with the State tightening its belt. The question they faced was how to make quick savings that would be noticeable to the French people.

The 10 billion euros of savings are divided into two parts. 5 billion euros will come from the management of all ministries, without exception. A decree will soon be issued to reduce the credits granted. The remaining 5 billion will be saved through the cancellation of public policies. One billion will be taken from the budgets of state operators such as Cnes (National Center for Space Studies), France Compétences or Business France; and 800 million euros in public development aid, notably paid to the United Nations (UN).

MaPrimeRénov’ budget cut

The budget for MaPrimeRénov’ will be reduced by 1 billion euros, which is the only measure directly impacting individuals. The budget was supposed to increase from 3.5 billion in 2023 to 5 billion euros in 2024. However, it will now be at 4 billion euros this year. This reduction seems paradoxical given the State’s goal of 200,000 large-scale renovations per year in 2024.

The government intends to achieve these two savings packages without needing to go through an amending finance bill (PLFR). However, they reserve the possibility of carrying out a PLFR in the summer of 2024, depending on how the situation evolves, including whether central bank interest rates fall or not. They want to avoid this scenario which would likely require the use of 49.3, which Gabriel Attal wants to evade.

New measures will likely be needed to meet targets

Economist Anne-Sophie Alsif believes the prospect of a PLFR is “inevitable”. She suggests that despite the government’s signaling, the current plan will not be sufficient. She believes the growth forecast of 1% is too optimistic and suggests it will likely be around 0.8%. If Bercy wants to meet its objectives, “bigger savings”, which could directly impact households, might be necessary in the coming months.

However, the government might not be ready to tackle this at the moment. This first warning shot is a response to a significant economic issue as well as a political one for the executive. There is a risk of debt deterioration and a downgrade of France’s rating, which could occur just before the European elections. This could pave the way for the National Rally, which is already a big contender in the election.