French public finances, already under scrutiny from rating agencies, financial markets and the European Union, are likely to come under further pressure regardless of the outcome of the early parliamentary elections, the first round of which began on Sunday.
All the major parties have announced new spending plans without explaining how they will be implemented or how effective they will be.
Opinion polls indicate that the far-right National Rally party will rank first, followed by the left-wing New Popular Front coalition, then President Emmanuel Macron’s (Ma’an) coalition, which belongs to the centrist movement, in third place.
The outgoing government had promised to reduce the budget deficit from 5.5% of GDP last year to 3%, which is the target level in the European Union by 2027, a goal that may be unattainable after the elections that will witness a second round on July 7. July 2024.
The far-right National Rally
In the event of forming a government:
- The National Rally wants to cut the value-added tax on energy sales by July, which it says will cost €7 billion by the end of this year and €12 billion over a full year.
The party says the tax cut will be financed by restoring two billion euros from France’s contribution to the European Union budget, although the bloc’s budget for the period from 2021 to 2027 was voted on long ago.
- The party is banking on big gains from raising the tax on windfall profits for energy producers, and replacing the tonnage tax on shipowners, which is calculated by the ton, with a regular corporation tax, but the sector’s bumper profits in recent years are likely to be eroded.
- The National Rally also wants to scrap a cut in the duration of unemployment benefits from July, a move the outgoing government says will cost €4 billion.
- Furthermore, the party seeks to link pensions to inflation, lower the retirement age to 60 for those who started working at 20 or younger, exempt some workers under the age of 30 from income tax, and increase the wages of teachers and nurses.
- The party wants to continue with local corporate tax cuts that the current government was forced to suspend because businesses could not afford them.
- The National Rally Party will also cancel the decision to raise the retirement age from 62 to 64 years, which was approved last year, and replace it with an undisclosed gradual system.
- The party says it will stick to current plans to reduce the budget deficit, in line with France’s commitments to its EU partners.
- The party wants to renegotiate the mandate of the European Central Bank, so that it focuses on jobs, productivity and financing long-term projects.
The New Popular Front, which belongs to the leftist movement
The New Popular Front coalition says its first steps will include:
- Increase civil service employees’ salaries by 10%.
- Providing free lunches and transportation for school students.
- Increase housing subsidies by 10%.
He also says he could cover the costs by raising €15 billion through a tax on super-profits, the details of which have yet to be worked out, and reimposing a wealth tax on financial assets to raise another €15 billion.
- The coalition wants to freeze basic food and energy prices while raising the minimum wage by 14%.
- He also wants to provide subsidies to small businesses that can’t cope otherwise.
- In 2025, the coalition will hire more teachers and health care workers.
- It will seek to boost public spending by an additional 100 billion euros.
The coalition says the costs will be covered by closing tax loopholes, making the income tax more progressive, reintroducing a wealth tax on financial assets, and capping inheritances in families at 12 million euros.
From 2026, public spending will reach €150 billion per year, mainly by increasing the budget of the Ministries of Culture and Sport to 1% of GDP.
- The coalition will also scrap the extension of the retirement age in 2023 and wants to reduce it to 60. The coalition says the extra spending will be financed by raising taxes and boosting growth, but it does not intend to cut the budget deficit and rejects the EU’s fiscal rules.
The “Ma’an” coalition, which belongs to the centrist movement
With Macron’s party committed to reducing the budget deficit to 3% of GDP by 2027, institutions from national audit bodies to the International Monetary Fund have major doubts even before early elections are called.
The party pledges to:
- Reduce electricity bills by 15% by 2025.
- Raise pensions in line with increases in inflation.
- He raised public sector wages, but his program does not specify the amount of the increase.
- The party will remain committed to not raising taxes significantly.
