(Bloomberg) — France’s caretaker government is preparing a stable budget for next year that would help the country meet a target to narrow its deficit below 3% of economic output by 2027, according to an official in the prime minister’s office.
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Ministries will be notified this week how much they will be able to spend in 2025, with the overall amount set to be unchanged year-on-year at €492 billion ($546 billion), the official told reporters. This takes account of €10 billion of savings to offset predicted inflation of 2%.
Outgoing Prime Minister Gabriel Attal wants to have a budget ready for his successor that absorbs price rises while restoring public finances and sticking to priorities such as military spending, the official said, speaking on condition of anonymity in line with government rules.
Preparations are aimed at allowing the incoming administration to meet a deadline to present the budget bill to parliament by Oct. 1, the official added.
France’s public finances are under close scrutiny after last year’s budget deficit came in much wider than expected, leading to a reprimand from the European Union in the form of a so-called Excessive Deficit Procedure that requires remedial action and can lead to fines for non compliance.
Emmanuel Macron’s June decision to call snap legislative elections after defeat in a European Parliament ballot added to uncertainty for investors by delivering a divided lower house with no group capable of forming a new government.
The president is yet to pick a new prime minister, choosing to reappoint Attal at the head of a caretaker administration until after the Olympic Games, which concluded on Aug. 11. He plans to meet with the heads of parties and groups represented in parliament on Friday for talks before making a decision.
The next government will be able to make adjustments to the budget bill based on its priorities before presenting it to parliament, the official said. Parties on both the left and right campaigned on pledges for additional spending.
The new premier will also benefit from some good news during a turbulent summer in the EU’s second-biggest economy. French unemployment unexpectedly declined in the three months through June, while the Paris Olympics are seen driving an acceleration in third-quarter growth, according to the Bank of France.
–With assistance from Samy Adghirni.
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