France needs unprecedented effort on spending, auditor says

Frances President Emmanuel Macron and French Minister for the Economy and Finances Bruno Le Maire meet with managing directors of sovereign funds at the 6th edition of the \“Choose France\” Summit at the Chateau de Versailles, outside Paris, France on May 15, 2023.

PARIS, June 29 (Reuters) - President Emmanuel Macrons government will need to make an unprecedented effort to rein in spending for France to meet its deficit-reduction target, the national public audit office said on Thursday.

Macrons government aims to reduce its public sector budget deficit to 2.7% by the end of his five-year term in 2027 from an estimated 4.9% of economic output this year.

The gradual reduction in the budget shortfall meant that France would be the only large euro zone economy to still have a deficit in excess of a European Union limit of 3% in 2026, the Cour des Comptes said in its annual outlook for the public finances.

With the highest public spending among rich countries relative to the size of its economy, France has rarely respected the EU limit and risks missing it due to optimistic growth assumptions, the audit office said.

To meet the target, the government would need to come up with 12 billion euros ($13.1 billion) each year, or 60 billion euros by 2027, the Cour said.

Its head Pierre Moscovici told a news conference that a recent government spending review which identified at least 10 billion euros in potential budget savings was a welcome first step, but added that nothing short of a \“cultural revolution\” was needed.

\“I know the actors, the cultural resistance, but there comes a time they need to be overcome, that takes political will,\” said Moscovici, himself a former Socialist finance minister.

In a response included in the report, the finance ministry said that its deficit-reduction plans were \“credible, tenable\” and would ensure that debt is brought down.

It added that the public finances would also benefit in the coming years from recent pension and unemployment system reforms in addition to more aggressive and regular reviews of the public finances for budget savings.

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