France faces major budgetary challenges under EU fiscal policies


(MENAFN) The next French government, which is set to be formed on July 7, is bracing for a significant budgetary challenge due to the stringent framework of European fiscal policies. These policies have become more rigorous following the recent overhaul and modernization of the European Union's common budget rules. As a result, France is under intense scrutiny for its persistent budget deficit, necessitating a comprehensive structural adjustment of its budget starting from 2025, a process that could span several years.

A French newspaper, reports that this budgetary amendment will require France to reduce its annual deficit by 0.5 percentage points of GDP. This task is made even more challenging by the high costs associated with the country's debt. The government faces a tight deadline; by September 20, it must present a detailed medium-term budget plan that not only aligns with its election campaign promises but also addresses emerging financial needs.

Complicating this endeavor are pressing geopolitical demands that require substantial investments. Recent global crises have underscored the necessity for such investments. The European Union, in particular, faces a dual challenge: it must respond to the economic repercussions of the COVID-19 pandemic while also managing the geopolitical transformations brought about by the Russian invasion of Ukraine.

These events have necessitated a swift and flexible response from the EU, including the reallocation of billions of euros from the EU budget towards defense, industrial policy, energy security, and support for Ukraine and Moldova. France's commitment to these financial adjustments is crucial, not only for maintaining national stability but also for ensuring broader European unity.

In this complex financial landscape, France's ability to navigate its budgetary constraints while meeting both national and EU-wide obligations will be critical. The new government will have to balance the need for fiscal discipline with the imperative of addressing immediate geopolitical and economic challenges. This delicate balancing act will define France's financial strategy in the coming years and its role within the European Union.

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