EU rebukes France for violating budget rules

The European Union’s executive branch criticized France on Wednesday for its high level of debt, a sharp reproach during an election period where President Emmanuel Macron faces significant opposition from both the far right and left.

The EU Commission advised seven countries, including France, to initiate an “excessive deficit procedure,” marking the beginning of a lengthy process before any country can be compelled to take corrective measures.

“Deficit criteria are not met in seven of our member states,” stated EU Commission Vice President Valdis Dombrovskis, highlighting Belgium, France, Italy, Hungary, Malta, Slovakia, and Poland.

For many years, the EU has set goals for member countries to keep their annual deficit below 3% of Gross Domestic Product and total debt under 60% of output. These targets have often been ignored for convenience, even by major economies like Germany and France.

This time, however, Dombrovskis emphasized that decisions must be made based on factual adherence to treaty guidelines and debt criteria, not the country’s size.

France’s annual deficit was 5.5% last year.

In recent years, exceptional situations such as the COVID-19 pandemic and the war in Ukraine have allowed for more leniency, but that period has now ended.

Wednesday’s announcement struck a sensitive chord in France, as Macron called for early elections following his defeat to Marine Le Pen’s far-right party in the June 9 EU parliamentary elections.

Le Pen’s National Rally and a newly united left coalition are leading in the polls against Macron’s party, both advocating for deficit spending to overcome economic challenges.

During the campaign, Macron’s team might use the EU’s reprimand to warn that extreme parties could ruin France, while opponents could argue that Macron’s spending has impoverished the nation, necessitating further spending.

Despite the criticism, EU Economy Commissioner Paolo Gentiloni noted that France is also making progress in addressing some “imbalances,” offering a “message of reassurance” to EU institutions.

The International Monetary Fund predicts that the French economy will grow by a modest 0.8% of GDP in 2024, increasing to 1.3% in 2025.

Unlike the strict measures imposed on Greece during its financial crisis a decade ago, Gentiloni stated that extreme austerity is not a solution for the future.

“Much less does not mean a return to austerity, because that would be a serious mistake,” he said.

He also refuted the idea that austerity alone pushed voters toward the extreme right, noting that lenient budget conditions in recent years have still led to right-wing victories in many countries.

“Look at recent elections. If the theory is ‘less expenditure, stronger extremes,’ we have not been in a period of reduced expenditure,” Gentiloni remarked.