France Extends 2024 Budget Into 2025, Aiming for New Budget by Mid-February

Dec 31, 2024, 07:55 AM

In France, the 2024 initial budget has been extended into 2025 without changes, as confirmed by a decree published in the Journal officiel on December 31, 2024. This decision was made due to the failure to vote on a new budget before the end of the year. The previous government under Michel Barnier had proposed a budget for 2025 that would have amounted to state expenditures of 492.9 billion euros, aiming for savings of over 7 billion euros compared to the 2024 budget to reduce the public deficit. However, the censure of Barnier's government by the National Assembly on December 4 prevented the enactment of this proposed budget. The new Prime Minister, François Bayrou, expressed hopes of adopting a new budget by mid-February, though he was not confident in achieving this timeline. In the meantime, a special law was passed in mid-December to allow the government to continue collecting taxes, spending based on the 2024 budget, and borrowing to finance the state and social security. This special law does not permit the traditional adjustment of the income tax brackets for inflation, potentially affecting 380,000 new households and millions of taxpayers with higher income tax liabilities if no new budget is adopted by the time of the spring income declaration.