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France’s vast public debt pile grew in the second quarter, official figures showed Friday, as Prime Minister Michel Barnier’s shaky minority government girds itself for a gruelling budget debate.<\/p>\n
New borrowings of 68.9 billion euros ($77 billion) between April and June increased the country’s debt pile to almost 3.23 trillion euros, or 112 percent of annual output, data from statistics agency INSEE showed.<\/p>\n
The figures underline the scale of the challenge for Barnier, the former European Union commissioner and Brexit negotiator heading a centrist and conservative coalition heavily outnumbered in the National Assembly lower house.<\/p>\n
With the chamber roughly divided in three since July’s parliamentary election, the NFP left alliance and far-right National Rally (RN) could oust the new government at any time if they joined forces in a confidence vote.<\/p>\n
There is scepticism among financial players of Paris’ ability to get its debt and annual deficit under control.<\/p>\n
Ratings agency S&P downgraded France’s creditworthiness earlier this year.<\/p>\n
And just this week the yield on France’s debt — the return investors can expect for holding 10-year government bonds — outstripped the measure for Spain for the first time since 2006, pointing to falling confidence among investors.<\/p>\n
Barnier is expected to lay out the broad strokes of his policy Tuesday in a speech to lawmakers that will also be closely watched by markets.<\/p>\n
His new budget minister Laurent Saint-Martin said Wednesday that the draft 2025 budget law would be filed “in the week beginning October 9”.<\/p>\n
“Our public finances are in a grave state, and I won’t beat around the bush,” Saint-Martin said, warning that this year’s annual budget deficit would likely top six percent of GDP — twice the European Union limit.<\/p>\n
He blamed lower-than-expected tax receipts and companies holding off on hiring and investment for much of the worsened picture, as well as saying local and regional administrations had spent more than planned.<\/p>\n
“We will have to make a significant collective effort” to get the public finances under control, Saint-Martin warned.<\/p>\n
Barnier and his team say they aim for more spending cuts than tax increases to right the ship, prompting accusations of “austerity” from the left.<\/p>\n
But the prime minister said Sunday that higher levies on big firms and very wealthy individuals could be part of the equation.<\/p>\n
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