Emmanuel Macron is facing a crisis after France was warned it must cut its spending by nearly £100bn or it risks falling into a debt spiral similar to Italy’s.
Leading economists from the Council of Economic Analysis explained that if the French government doesn’t rein in spending and reduce debt, the country risks having fork out eye-watering amounts to pay its debt back.
Council members Adrien Auclert, Thomas Philippon and Xavier Ragot wrote: “The good news is that France has so far remained in control of its own destiny.
“Our debt is the direct consequence of our budgetary choices. It is not the mechanical accumulation of a snowball thrown down a steep hill.”
The economists’ advice calls on France to reduce its primary deficit — the difference between what a state gets into its coffers and how much it outlays, minus interest payments — by four percent of GDP over seven to 12 years.
They argued cutting it faster than that would be detrimental to growth, while slashing it at a slower rate would see the government have to spend too much to pay the debt back.
However, power in France is well and truly up for grabs, and whoever manages to negotiate their way into government will determine whether the advice is heeded.
The left-wing New Popular Front, who won a shock victory in the recent snap election, has vowed to reverse many of President Macron’s economic reforms – at great expense.
Likewise, Marine Le Pen’s National Rally has said it would back the far-left’s France Unbowed’s pledge to scrap Mr Macron’s pension reforms – again, at great expense.
The French president’s reforms saw the retirement age raised to 64 from 62. A move widely unpopular in France.
