Budget 2025: France Risks A Major Economic Crash

In the face of growing economic challenges, the Ministry of Economy presents a budget for 2025 marked by a dual ambition: reducing public spending and accelerating the environmental transition. A balancing act that raises questions about French economic growth.

An unprecedented austerity plan for public finances

The Minister of Economy, Antoine Armand, presented on Monday, October 21, to the National Assembly a drastic plan for reducing public spending. The stated objective: to eliminate 5 billion euros of “non-priority” spending by 2027, with an initial step in 2025 aiming for 60 billion in savings to bring the public deficit down to 5%.

This complete revision of expenditures particularly targets tax loopholes deemed “unjustified” or “incompatible” with the government’s objectives of supporting employment and decarbonization.

To achieve this, the executive is relying on an unprecedented mobilization of all public administrations, which will have to report annually on their budgetary efforts.

However, the OFCE sounds the alarm, forecasting a negative impact on growth that could fall to 0.8% in 2025, compared to the 1.1% expected in 2024.

The “green budget,” a reaffirmed priority despite austerity

In parallel with these budget restrictions, Bercy announces a record “green budget” for 2025, reflecting its commitment to maintaining the course of ecological transition. Environmentally friendly expenditures will reach 42.6 billion euros, an increase of 2.1 billion compared to 2024.

This allocation, described as “unprecedented,” will notably fund support for renewable electricity production and energy renovations of buildings.

This environmental orientation is reflected in a 35% increase in green spending between 2022 and 2025, while expenditures harmful to the environment have decreased by 15% over the same period. A considerable effort that demonstrates a profound reorientation of the state’s budgetary priorities, despite the context of austerity.

The major challenge for the government will be to reconcile these environmental ambitions with the objectives of restoring public accounts, while preserving the purchasing power of the French, already weakened by the gloomy economic outlook for 2025.