We warned our readers about the potential for budget problems from overspending in France – have a look at our recent presentation. According to an article in the FT, a quote from a French institution Cour des Comptes, “the outlook for public finances for 2019 is very fragile.” The problems that France has now are the high levels of public debt and the growing deficit not give the government much room to move – things are getting tight in the French budget.
This comes as President Macron spent 11 billion Euros to the public after the Yellow Vests protests moved into high gear. While fiscal discipline is at the core of the Macron budget and government, the hand outs to the protesters and the people seem to go against his core policy. Macron is in a tight position.
Despite the French government saying that it will cut in other areas, the key point is that this report is saying that the likelihood for a European slowdown is increasing and with the possibility of global weakness, the deficit might just be a tough challenge in the coming years. An economic slowdown means lower tax revenues…..this is surely going to make the French tax authorities nervous.
The key question now is whether Mr Macron can carry out his next level reforms that will keep the budget within the 3.0 percent limit that the powers in Brussels insist upon. Marco is listening to the public but the issues on the budget will come to the front of all newsprint in the coming months.