France to tighten government spending further with eye on deficit

The French government is to freeze 1% of the budget of each ministry for the current year in a bid make good on its deficit reduction commitments, the finance ministry said.

The measure is in addition to an earlier decision to cut 5% of each ministry's budget.

President Emmanuel Macron is under pressure over its debt levels after rating agency Fitch last month downgraded France's sovereign credit rating a notch to AA-, warning its fiscal metrics were "weaker than peers".


A second major ratings agency, Standard & Poor's, is due to deliver its view on France in early June.

Finance Minister Bruno Le Maire told French news agency AFP that he had proposed the additional spending freeze to the prime minister "to meet our public finance commitments in 2023" of keeping the deficit below 5% of gross domestic product.

The government expects the public sector budget deficit to hit 4.9% of economic output this year, up from 4.7% in 2022, before gradually falling to less 3% in 2027.

However, recent pledges to increase vocational high school and handicap spending as well as unfunded tax cuts for the middle class have raised questions over the forecast.

Le Maire said the 1% spending freeze was worth 1.8 billion euros ($1.98 billion), bringing the total tightening to 10 billion euros in this year's budget.

The finance ministry confirmed the measure to Reuters.