France announces unprecedented public spending cuts and tax increases by 2025

France announces unprecedented public spending cuts and tax increases by 2025
France announces unprecedented public spending cuts and tax increases by 2025

The draft budget plan will come under intense scrutiny by the European Commission, after Brussels formally warned France in June of its excessive budget deficit.

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He French government revealed this Thursday in Paris, during a press conference, its draft budget plan for 2025. This is a sensitive topic considering that the astonishing deficit of France reach more than 6% his GDP at the end of the year, a figure higher than that of almost all other European countries.

He new government of the French Prime Minister Michel Barnier is under pressure from the financial markets and the European Union to balance its budget. The Government’s objective is to cut 60,000 million euros only in 2025, that is, 2% of its GDP, an amount unprecedented.

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The newly appointed Minister of Economy, Antoine Armand, announced a dizzying cut in public spending of 40 billion euros that will affect all ministriesan unpopular measure within the Government.

Education will be the most affected sector

The State will be severely affected, with more than 20 billion euros in spending cuts. “We have to do it better with less staff. We propose some 2,200 job cutsdistributed among ministries and state operators,” said Budget Minister Laurent Saint Martin, who promised “selective reductions” and “no indiscriminate cuts.”

The sector of education will be the most affected, with more than 2,000 job cuts. On the other hand, the Budget Minister promises “substantial increases to strengthen sovereignty and security, particularly in the security sector Justice and the Armed forces“.

The budget of the Ministry of will also suffer substantial cuts justified by the end of the Olympic Games period.

“Exceptional and temporary” tax increases

The rest of the 20 billion euros will come from “exceptional and temporary” tax increases“. The tax increase will affect the highest incomes (over 250,000 euros per year) for three years. This measure should generate an additional 2,000 million euros in 2025.

More than 400 of the companies with higher income that invoice more than 1,000 million euros will be subject to a 20% corporate tax. This tax should contribute 8,000 million euros in 2025. Its scale will be reduced the following year, to bring in 4,000 million euros in 2026.

Tax on airline tickets

He aviation sector will also pay a price with the tightening of the ecological sanctions and a tax about the tickets of airplane.

As for the energythe electricity tax (TICFE), which had been reduced during the energy crisis, will increase in February. Before it was around 33 euros per MWh. In 2025, the price will rise to “about 50 euros per MWh”, announced the Ministry of Economy, ensuring that the electricity bill will not increase for most households due to a drop in the market price.

Although the Government stated that it is open to debate in Parliament, the fragmented panorama current politician could push the Prime Minister, Michel Barnier, to adopt the text without a vote, relying on the controversial article 49.3 of the French Constitution.

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