OR France ruled out the possibility of further cost cuts to achieve the goal of reducing the deficitif a trade war is hurting the economy, in questioning efforts to restore the country’s trembling public finances.
In a scenario where France’s gross domestic product and revenue will be lower than expected, we will need to “accept” a higher fiscal gap than scheduled, Finance Minister Eric Lobar said on Friday, speaking about the country’s efforts to reduce it.
“Even if the situation deteriorates, I do not want to make further cuts in public spending that would have a negative impact on the economy, businesses and the French,” he said according to Bloomberg.
The weaker commitment to reduce the deficit reflects the sweeping consequences of Donald Trump’s threats to trade war.
Prior to the announcement of the US president on April 2 to impose duties on all commercial partners – including 20% on European Union imports – the French government had reaffirmed a plan to reduce the fiscal vacuum to 5.4% of economic production this month.
This target had been set in the delayed budget bill of 2025 approved in February, after the previous government collapsed into a prolonged dispute. These political and budgetary difficulties undermined the confidence of investors in France last year, raising the government’s borrowing costs in relation to its counterparts.
Lobar has made France’s remedy for public financial priority since he took over his duties at the end of 2024. On Friday, he said that any failure in the deficit would be “transient”.
“The commitment we have made to Europeans and financial markets is the level of expenditure,” he said. “It is important for us to control public spending and change them in a steady way.”
Lobar added that France could still have a “positive, albeit moderate growth” year if a US agreement is reached quickly.