The French Government, in office after being overthrown by a motion of censure last week, adopted this Wednesday a special bill which extends the 2024 budgets to next year, initially on a temporary basis while waiting for a new Executive to present others soon.
This bill, which must be processed for an emergency procedure in Parliament to be adopted before December 31 and does not admit amendments, it includes only three articles, explained the head of the Treasury, Laurent Saint-Martin, at a press conference at the end of the Council of Ministers.
“It is a bill that prevents a financial blackout,” said Saint-Martin, who specified that it will not allow nor increase salaries of officials or other public employees, nor update the income tax scale with inflation, reports the Efe agency.
This means that, theoretically, starting in January there will be 17.6 million taxpayers They move to a higher tax rate and pay more, but that should have no effect if there is a new Executive that presents new budgets approved in the first weeks of 2025.
Likewise, until these new budgets go ahead, public officials and employees will see their frozen salariessince any revaluation is a “discretionary” measure that a government in office is not authorized to take.
The same will not happen with pensioners, whose salaries will be revalued with a rise of 2.2% for all from January, something that was not foreseen in the draft budget of the Government of the acting Prime Minister, the conservative Michel Barnier.
The reason, indicated the Minister of Finance, is that the Social Security code contemplates indexation with inflation. This will mean that the deficit of basic pension schemeswould exceed 10,000 million euros in 2025, compared to 2.6 billion in 2023 and the 6.5 billion expected in 2024.
Tax collection and debt issuance
Saint-Marin explained that in this special law, which must start discussing in plenary of the National Assembly on Monday and in the Senate on Wednesday, there is no trajectory of public finances, that is, there is no estimate of the total deficit.
However, he acknowledged that if there were no budgets later, the deficit in 2025 would be even higher than that anticipated for 2024, 6.1% of gross domestic product (GDP).
The first article of this bill allows you to continue collecting taxes with the provisions that were in force in 2024 and allocate budget allocations to public administrations and pay the contribution to the European Union.
The second and third enable, respectively, the Treasury and Social Security or other public organizations to continue issuing debt securities to finance themselves.
The preparation of budgets for 2025 is at the expense, first of all, of the composition of a new Government, for which the French president, Emmanuel Macronsaid yesterday that he intended to name aun prime minister in 48 hoursthat is, before Thursday night.
But the problem is that this new Executive would need to have a parliamentary majority behind to be able to function and it is not clear that this can come out of the conversations started yesterday, in the presence of Macron, by the political groups, with the notable exclusions of the extreme right of Marine Le Pen and La Francia Insumisa (LFI) of Jean -Luc Melenchon
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