Temporary measure prevents the “shutdown” of public services; another financial plan should be voted on in January
The French Senate this Wednesday (Dec 18, 2024) a special budget bill for 2025. There were 345 votes in favor and one abstention. The text authorizes the continuation of the collection of taxes and expenses already authorized by the current 2024 budget law.
The temporary measure avoids a “shutdown” in France – when public services are paralyzed due to a lack of definition of government resources. Another financial plan must be definitively voted on in January.
The approval of a French budget law has hampered the country’s recent governments. Then Prime Minister Michel Barnier (The Republicans, right) was from office on December 4 after approving a budget proposal without Parliament’s consent. With his resignation, President Emmanuel Macron Fraçois Bayrou (Democratic Movement, center) becomes prime minister.
The definition of a budget law for the country becomes even more important because of France’s inadequacy with the tax laws established by the European Union. The bloc requires that member countries do not have deficits greater than 3% of GDP (Gross Domestic Product). France 5,5%.
If a European Union member country does not comply with the defined requirements, it becomes susceptible to tax recommendations from the European Commission, the bloc’s Executive body. And continued non-compliance could lead to the government suffering economic sanctions, such as fines and suspension of subsidies granted by the European bloc.
Furthermore, a country’s fiscal imbalance can be dangerous to the economy as it puts it under pressure from investors. This could result in a flight of foreign capital from the country due to the government’s lack of credibility in managing its expenses, exchange rate devaluation and the population could face an increase in the cost of living.
