France could be headed for a difficult return to reality – ING
2024.06.21 15:14
Investing.com – With robust fiscal deficits and high debt, which undermine growth potential, the economic outlook is complicated for France, which will hold elections starting at the end of this month. Parties with opposing views aim to equalize these problems—or at least mitigate them. A report released by ING Economics this week states that France “may be heading for a difficult return to reality.”
“It is not surprising that the European Commission proposes placing France (along with four other countries) under Excessive Deficit Procedures (EDP),” notes ING, which believes that the country’s political situation will be complicated and indicators do not suggest the appointment of a prime minister favorable to the president.
“Any desire to break with the past will likely run up against the reality of the numbers. And this could happen very quickly, as the European Council is expected to confirm the Commission’s proposal to place France under the EDP by mid-July, and the country will have to propose a fiscal adjustment path by September 20,” adds ING.
Elections in France
The legislative elections will choose, between June 30 and July 7, the 577 deputies who will serve in the French Parliament. The far-right National Rally party is leading the polls at the moment.
The National Rally has not yet published a detailed budget program, but Jordan Bardella considers it necessary to have a rational approach and conduct an audit of the finances, including France’s social security system, before taking more robust measures.
The bloc of the current Prime Minister, Gabriel Attal, tends to indicate in its program, which should be released next week, themes aimed at seeking greater balance in public accounts, with measures to increase revenue and cut spending.
The prime minister is appointed by the president of France but requires a majority in the National Assembly to govern.
“If the deputies present and vote on a motion of no confidence against the government, the prime minister is obliged to resign. The president can ‘counter-attack’ by declaring a new dissolution of the Assembly. But be careful, this cannot be done within a year of the previous one (June 2025),” clarifies ING.
Earlier this month, French President Emmanuel Macron announced that he would dissolve the French parliament and call for legislative elections, after a defeat in the European elections by Marine Le Pen’s far-right party.
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