Debt-stricken France gets EU blessing for austerity plans

French Finance Minister Eric Lombard attends the European Union Finance Ministers meeting in Brussels. Alexandros Michailidis/EU Council/dpa

Heavily indebted France has received the green light from the Council of the European Union for its plans to gradually reduce its substantial deficit.

The body of governments of the EU member states, meeting in Brussels on Tuesday, followed a recommendation by the European Commission to adopt the budget.

The plan envisages that the new debt will gradually fall to the prescribed limit of 3% of economic output by 2029.

This year, the new government in Paris is initially aiming for a deficit ratio of 5.4%, after the previous government of former EU commissioner Michel Barnier was brought down by the opposition in a dispute over a more ambitious austerity budget.

As a result, France does not yet have a budget for the current year – and it is still unclear which austerity measures the new Prime Minister François Bayrou will be able to push through the divided parliament.

French Finance Minister Éric Lombard thanked his EU counterparts and the European Commission. "We cannot leave such debt and such a deficit to our children and grandchildren," he said.

With a debt ratio of almost 110% of economic output in 2023, France is among the EU's worst performers, according to the EU statistical office Eurostat. Only Greece (163.9%) and Italy (134.8%) are more indebted.

France is the second-largest economy in the EU, after Germany. The union's rules on government debt and deficits stipulate that the debt level of a member state must not exceed 60% of economic output.

At the same time, the general government deficit – the difference between the income and expenditure of the public budget, which is to be covered primarily by borrowing – must be kept below 3% of the gross domestic product.

A general view of the round table of the European Union Finance Ministers meeting in Brussels. Francois Lenoir/EU Council/dpa