Lacking a proper budget for 2025, the government renewed at the last minute the credit ceilings for ministries initially granted for 2024, but intends to limit them to “essential expenses” until the adoption of a state budget.
From January 1, ministries will be able to continue to incur expenditure within the limit of what was provided for in the initial finance law of 2024, according to a decree published Tuesday in the Official Journal.
However, they must only consume “the minimum of credits that the government deems essential to continue the execution of public services”indicated the Ministry of Public Accounts to AFP, particularly with regard to “essential expenses”.
This includes, among other things, the payment of salaries of civil servants or the payment of social benefits. But, for example, “no net job creation will occur during” this period, specifies a circular sent to ministers.
Operating expenses are limited to those “strictly necessary”and ministries must not enter into new contracts, take new financial participations or make new investments, unless they are “absolutely essential”.
Consulted by AFP, this document specifies that 75% of the credits granted Tuesday by the decree will be frozen at the beginning of 2025.
This freezing of credits will take place until the adoption by Parliament of a budget for 2025. Other credits could, however, be released if the budget is delayed in being adopted.
Prime Minister François Bayrou hopes for adoption “in mid-February”without however being “sure to get there”. To do this, he intends to start again “the copy that was voted on” in Parliament before censorship.
For the LFI deputy and president of the Finance Committee at the National Assembly Eric Coquerel, there is urgency, because the carryovers of credits granted in 2024 but not spent must be validated by March 15. “If no budget is voted on by then, 16 billion euros which were frozen in the spring, 4 of which were canceled, will be considered lost”he told an AFP journalist.
Loan to ” compromise “ with the opposition, the new Minister of the Economy Éric Lombard must invite all the parties represented in Parliament to come and discuss it in Bercy.
A special emergency law
The previous government presented its proposed budget for 2025 in October, showing a deficit as has been the case in France since 1975 despite the planned savings.
Among the options proposed, such as the partial deindexation of pensions next year, some displeased the deputies of the National Rally and the left, who voted on December 4 to censure the government, preventing the adoption of the draft budget.
Pending the adoption of a new budget, Parliament voted in mid-December for a special law which allows the executive to continue to collect taxes, borrow to finance state expenditure and of Social Security and the ministries to consume the credits on the basis of the 2024 budget.
The special law, however, does not allow the traditional inflation indexation of the income tax scale to be practiced on January 1, which should not have an immediate impact, but could increase taxes for certain people. households after filing their income tax return in the spring, if no budget is adopted by then.
Excessive deficit
Another consequence: basic pensions will be increased more than what Mr. Barnier’s government planned in its project, at 2.2%.
Likewise, the price shield on electricity will end on February 1 but without the planned tax increase. A boon for households who will benefit from a 14% reduction in their bill.
The renewal of the budget comes as France’s public debt reached 3,303 billion euros at the end of September, or 113.7% of GDP, one of the highest in the euro zone, while the public deficit is expected to reach 6.1% of GDP this year, which earned the country a procedure for excessive deficit by the European Commission.
Mr. Lombard hopes that in the budget which will be voted in 2025 the public deficit will be fixed “a little above 5%” you PIB, “in order to protect growth”. According to him, reducing the deficit implies possible tax increases “very limited” but above all “additional savings”.
The Opinion newspaper indicated Tuesday evening that the Minister of the Economy would revise downwards the growth forecast for 2025 to 0.8% compared to the 1.1% retained by the Barnier government in its draft budget.
Contacted by AFP, the Ministry of the Economy did not wish to comment on this information.
