France seeks extension on EU deficit deadline amidst political turmoil
As reported by the newspaper Le Figaro, the French authorities are appealing to the European Commission to extend the deadline for presenting their budget deficit reduction plan. France is subject to the excessive deficit procedure enforced by the EC.
Originally, France was to submit the deficit reduction plan to the Commission by 20 September. The Ministry of Finance has confirmed that it is seeking an extension to this deadline, aiming to "ensure consistency" with the budget project for 2025.
The French parliament is expected to adopt the budget in the autumn; however, progress has been delayed due to difficulties in forming a government.
France asks for more time on the excessive deficit procedure
It is unclear how much additional time France is requesting from the EC. EU regulations allow for extending the deadline if the delay is deemed "reasonable". According to Reuters, the latest possible extension is until 15 October.
France, the second-largest economy in the eurozone, entered the excessive deficit procedure initiated by the EC this summer. This procedure is triggered when an EU country's public finance sector deficit exceeds 3% of GDP or public debt exceeds 60% of GDP. Last year, France's budget deficit reached 5.5% of GDP, and by the end of March this year, public debt stood at 111% of GDP. Besides, France, Poland, Italy, Belgium, Hungary, Malta, and Slovakia are also subject to this procedure.
Economic issues in France have been exacerbated by a political crisis that began with the dissolution of parliament in June this year. A prime minister was not appointed for nearly two months following early parliamentary elections. However, a new government, which must adopt the budget, is expected to be formed in the coming days.
According to the outgoing government's statement, the aim is to reduce the budget deficit to 3% of GDP by 2027. To achieve this, it will be necessary to implement savings of £85 billion by 2027.
