Macron releases first budget
President Emmanuel Macron will release his first budget on Wednesday. His budget is expected to be more business-friendly than those of his predecessors.
According to TheLocal.fr, Macron is facing two major economic challenges. France's economy only grew 1.7 percent last year and the country still has an unemployment rate of 9.5 percent. That is about twice as high as the unemployment rate in strong economies like Germany.
Macron's budget will attempt to bring France's deficit within 3 percent of GDP - an EU guideline - for the first time in 10 years. If Macron is successful, this will give him credibility when he advocates for EU-wide economic reform.
The president's budget promises €16 billion in savings and forecasts the deficit to be 2.6 percent of GDP. A previous estimate placed that figure at 2.9 percent.
However, some critics question how Macron will manage France's deficit since his budget also includes €10 billion in tax cuts.
The government has already announced planned cuts to defense spending and housing subsidies. These planned cuts have contributed to Macron's declining popularity ratings and created tension in his government.
Pierre de Villiers, France's head of armed forces, resigned his position in response to Macron's defense cuts. In a statement released at the time of his resignation, he said, “In the current circumstances I see myself as no longer able to guarantee the robust defense force I believe is necessary to guarantee the protection of France and the French people."
Some additional savings is expected to come from a €5.5 billion reduction in the social security budget. The proposed budget also cuts over 1,500 government jobs.
This streamlining is part of Macron's plan to make France friendlier to investors. He has already approved a number of labor reforms and has also proposed a corporate tax cut to 25 percent. The rate is currently 33 percent.
Spending is expected to increase on environmental measures. Macron has authorized an investment fund that will provide incentives for people who trade in environmentally unfriendly vehicles.
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