France is entering an era of belt-tightening, as the wars in Ukraine and Gaza, economic slowdowns in Germany and China and record-high interest rates take a bigger-than-expected toll on growth.
The French will find themselves faced with cuts of 10 billion euros ($10.8 billion) in government spending, on items including environmental subsidies and education, the government announced Thursday, on top of €16 billion in cuts announced a few months ago. The finance minister, Bruno Le Maire, on Monday revised the forecast for economic growth this year to 1 percent, down from 1.4 percent at the end of last year.
“Lower growth means lower tax receipts, so the government must spend less,” Mr. Le Maire said at a news briefing.
After spending lavishly during the pandemic to support the economy and shield consumers from high energy prices, France is now at risk of breaching European Union budget rules that restrict government borrowing. To avoid that, the government must cut costs to lower the deficit to 4.4 percent of gross domestic product this year, from 4.8 percent
Paris is increasingly concerned about French debt’s being downgraded by international rating agencies, a move that would increase borrowing costs.
The French slowdown mirrors the tepid recovery across Europe, which has failed to bounce back as quickly as the United States, where the economy, although slowing from breakneck growth, continues to be powered by consumer spending.
