Thierry Breton, former European Commissioner for the Internal Market, has issued a stark warning regarding France’s economic outlook, urging the swift appointment of a new government to address the country’s mounting fiscal challenges.
In an interview with Europe 1 on December 19, Breton emphasised the need for decisive action on France’s escalating debt crisis and the urgent formulation of a viable budget.
Describing the current economic climate, Breton painted a picture of stagnation: “Companies are at a standstill, they’re not investing, they lack visibility and that’s leading to redundancy plans,” he noted.
To put France back on track, Breton outlined his key priorities: The creation of a balanced budget, substantial cuts to public spending and no increase in taxes.
On December 18, France passed a “special law” to address the lack of a 2025 budget, which was abandoned following the collapse of the Barnier government on December 5. This legislative tool was designed to enable the executive to collect taxes and borrow funds to finance the State and social security.
Breton has criticised that approach, warning it was not a sustainable solution.
He argued the “special law” imposed no limits on debt and allowed France to continue borrowing indefinitely.
According to Breton, France’s future hinges on slashing public expenses. “We can’t continue being the country with the highest rate of public spending while simultaneously imposing the highest taxes on businesses,” he warned.
“If we carry on like this, France will sink,” he said.
He stressed that, with the emergence of three political blocs in the French parliament, parties must now learn to collaborate effectively as they all ultimately share the common goal of reducing the national deficit.
Just days earlier, Breton had sounded the alarm over the possibility of an Argentine-style economic collapse, stressing that time was running out for France to avoid such a scenario.
He was not the only one worried about the country’s economic trend.
In an unprecedented joint statement published on December 17, employers’ organisations and trade unions called on politicians to put an end to the “instability” that was compromising “the future of companies and the daily lives of employees”.
“The instability into which our country has plunged brings with it the risk of an economic crisis with dramatic social consequences,” they said.
“Already, investment projects have been frozen, hiring intentions have been revised and business failures of all sizes are multiplying to the point of reaching a level not seen for a long time,” they noted, echoing Breton’s warnings.
French industry is facing a deepening crisis. The Reims region is an example of that.
On November 14, aerospace subcontractor Reims Aerospace was forced into liquidation, leaving 75 employees without jobs.
Steel giant ArcelorMittal then revealed plans to shut down its 113-strong Service Centre by June 2025, with only administrative roles remaining.
Additionally, automotive supplier Valeo has implemented a redundancy plan, cutting 97 of its 323 positions.
Moody’s has unexpectedly downgraded France’s rating, adding pressure on the country’s new prime minister to corral divided lawmakers into backing his efforts to rein in the public finances. https://t.co/yRzoA2IKz5
— Brussels Signal (@brusselssignal) December 16, 2024
