According to the Ministry of the Economy, the cost of the war in the Middle East is estimated “around 4 billion” euros while 130 million euros in support spending have been announced in recent weeks by the government.
Maintain the budgetary trajectory at all costs: the French government will meet on Tuesday the public finance alert committee, to assess the economic situation and “inform the decisions” to be taken, against a backdrop of uncertainties linked to the situation in the Middle East.
“The objective is to identify possible slippages early enough and to take corrective measures quickly,” explained to Le Parisien this Saturday, April 18, Minister of the Economy Roland Lescure.
This body, launched after significant slippages in the public deficit in 2023 and 2024, will bring together in Bercy parliamentarians, representatives of Social Security, unions and local authorities around the Ministers of the Economy Roland Lescure, Public Accounts David Amiel, Labor Jean-Pierre Farandou, Health Stéphanie Rist and Regional Planning Françoise Gatel.
A four billion euro crisis
Last year, this structure met twice: on April 15 around former Prime Minister François Bayrou, who had alerted the French to the debt “trap” which threatened “the survival (of) the country”, and on June 26 to announce an additional brake of five billion euros on public spending in order to meet the objective of a deficit of 5.4% of gross domestic product (GDP) in 2025. It met finally established at 5.1%, good news which the government welcomed at the end of March.
But the task remains arduous, while the war in the Middle East is shaking up the French economy and leading to “a significant increase in debt service”, with the cost of the crisis “estimated at around 4 billion” euros, Bercy warned on Tuesday. And uncertainty persists, with Iran once again closing the strategic Strait of Hormuz on Saturday, after announcing its reopening on Friday during the truce with the United States.
130 million euros in aid to tackle the crisis
Faced with soaring energy prices, the government this week slightly reduced its economic growth forecast, to 0.9% in 2026 (compared to 1% previously forecast), and revised its inflation forecast upwards, to 1.9% (compared to 1.3% previously). However, it maintains its target of 5% deficit this year and its commitment to bring it below 3% in 2029, as requested by Brussels. “Credible” forecasts, according to Maxime Darmet, economist at Allianz Trade.
On Tuesday, the alert committee will take stock of the situation of the public accounts, in light of these new forecasts, and will have the task of “shedding light on the decisions to be taken”, Bercy indicated this week. David Amiel had warned at the end of March that “any new public expenditure which could be made necessary by the energy crisis” would lead to “a cancellation of an expenditure which was planned, to the nearest euro”, to “meet (the) objectives for 2026”.
“Transparency”
The government has already announced 130 million euros in support spending in the face of the crisis: 70 million to help transporters, fishermen and farmers, and 60 million to strengthen the energy check. Prime Minister Sébastien Lecornu indicated on Friday that a “next aid package” would be announced in May for the most affected sectors.
“We feel that France is really being watched closely by the markets, and the government is very aware of this,” emphasizes Maxime Darmet. “There is really a desire not to increase the deficits,” he notes.
During this meeting, “I first expect a cancellation of credits,” indicated the general budget rapporteur to the National Assembly, Philippe Juvin (LR). “Then, I expect transparency on the real figures of the planned deficit”, because “it is essential to know precisely where we are”, he added. “Thirdly, I am waiting for more solid prospective elements,” continued the MP. “I hope for transparency on the forecasts and the way in which the budget will slip due to the effect of the war,” explained the president (LFI) of the Finance Committee of the Assembly, Éric Coquerel. “Based on that, I don’t really see how we avoid a amending finance bill,” he judged.
Originally published at Almouwatin.com
