French deficit worsens to 'very rare' level
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00:00 The French government hit with an accounting shock Tuesday, as the country's budget deficit,
00:05 the difference between incoming revenues and spending outlays, was revealed to have hit
00:10 €154 billion in 2023, 5.5 percent of total economic output, a major and very rare shortfall,
00:19 one that France's minister of public accounts blamed primarily on falling tax receipts.
00:24 We lost more than €20 billion in receipts, billions in social security charges, corporate
00:31 taxes, sales taxes.
00:33 The Macron administration insists it won't be raising taxes to restore fiscal balance.
00:39 Instead, it's planned €10 billion in spending cuts already this year, with more likely to
00:44 come as it tries to bring the deficit down to its 4.4 percent target for 2024.
00:50 But such austerity policies risk further weighing on France's already anemic economic growth.
00:56 Opposition lawmakers, and even some from Macron's own party, are calling for a debate on the
01:02 subject.
01:03 Economists say such a wide deficit gap will be difficult to close without a tax hike.
01:10 When we take the budget situation and the goal of very quickly bringing the deficit
01:14 down to 3 percent in a very low growth environment, it will be hard to avoid looking at taxes.
01:24 2023's shortfall risks weighing on 2024 and beyond via higher borrowing costs.
01:31 France's overall public debt, at just over €3 trillion, more than 110 percent of GDP,
01:37 makes it Europe's third most indebted country behind only Greece and Italy.
01:42 France has committed to getting back to the EU's official annual deficit limit of 3 percent
01:47 by 2027.