Key insights
- France's 2025 budget deficit was lower than expected due to higher economic growth and tax increases. The deficit was 5.1% of GDP, down from 5.8% in 2024. Public debt increased to 115.6% of GDP. While positive for France, the news has a slightly negative influence on US markets as it highlights fiscal challenges in a major European economy, potentially impacting global economic stability.
PARIS, March 27 (Reuters) - France reduced its public sector budget deficit more than expected last year as economic growth outpaced forecasts and tax hikes boosted government income, official data showed on Friday.
The statistics agency INSEE said the 2025 public accounts showed a fiscal shortfall of 5.1% of economic output, down from 5.8% in 2024 and better than the government’s last estimate of 5.4%.
INSEE said public sector expenditure grew by 2.5%, slowing from a 4% in 2024 and eased by lower inflation. Revenue growth accelerated to 3.9% from 3.2%, as a result of tax increases.
The government aims to cut the deficit this year to 5.0% as part of plans to bring the shortfall back in line with a European Union ceiling of 3% by 2029.
"The 2025 figures are encouraging us to be ambitious about further reducing the deficit in 2026," French Budget Minister David Amiel told TF1 TV on Friday, while adding that global uncertainties accurate predictions difficult.
Amiel said potential aid for people and companies hurt by energy price volatility would be offset by spending cuts elsewhere.
INSEE also said that France’s public debt stood at 115.6% of GDP in 2025, compared to 112.6% in 2024 and the government’s expectation of 115.9% in 2025.