The financial challenges facing France are significant and have been ongoing since the oil shock ended the boom years after World War II. Last year, the national deficit was 5.5 percent of GDP, with a total debt of over 3,100 billion euros, equivalent to 110 percent of GDP. This trend has put France in a difficult position to comply with the Maastricht criteria.
While there is no immediate threat of national bankruptcy, the interest on debt is a heavy burden on the state budget, limiting funds for necessary investments. To address this issue, the government plans to implement financial reforms, including a pension reform that increases the retirement age. However, debates within French politics are ongoing regarding measures to combat these challenges.
President Macron has ruled out tax increases but has expressed openness to discussing introducing taxes on profitable companies and reducing government spending through various measures. Proposed unemployment insurance reform aims to lower spending and increase employment rates but faces opposition from various interest groups.
Despite these efforts, Moody’s agency does not believe France will meet the Maastricht criteria in three years. The country risks becoming a financial problem child in Europe resembling Greece but on a larger scale. The road to financial stability for France is uncertain as it continues to struggle with balancing its budget and reducing debt.
In conclusion, while France faces significant budget deficits that make it challenging to comply with Maastricht criteria, there are ongoing efforts by the government and politicians alike to address these challenges through financial reforms and other measures. However, it remains uncertain whether these efforts will be successful in achieving financial stability for France in the long term.
