France reduces budget deficit in 2024 despite gloomy forecasts

France's 2024 budget deficit came in at 5.8% of GDP, outperforming the 6% forecast and surprising analysts who had anticipated more severe deterioration.

The Finance Ministry of the country attributed the deficit improvement to a 3.1% year-over-year tax revenue acceleration (from 2.2% in 2023), though persistent 3.9% growth in government expenditures continued to strain fiscal balances.

French authorities aim to progressively reduce the budget deficit to meet the EU's 3% GDP target by 2029. However, this fiscal consolidation faces headwinds from mandatory military spending increases pledged by President Macron, requiring compensatory measures through other budgetary optimizations.

International rating agencies maintain a cautious stance on France's economic trajectory. Moody's downgraded the country's sovereign credit rating in December, while S&P Global and DBRS revised their outlooks to negative, pointing to the necessity of more decisive action.