Costly election pledges in France stoke fears of splurges that risk pushing country deeper into debt

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France,Elections,Emmanuel Macron

In France, parties of the far right and the far left are making election promises that are appealing -- and expensive. Vying to oust the centrist government of President Emmanuel Macron in parliamentary elections starting on June 30, the parties are vowing to cut gasoline taxes, let workers retire earlier and raise wages.

FILE - People shop at a market in Versailles, outside Paris, France, on July 3, 2022. From taxing billionaires and making gasoline cheaper to earlier retirement and higher wages, opposing left-right blocs in France’s election are making costly campaign promises that are spooking investors as they seek to woo voters and sideline President Emmanuel Macron. FILE - La Defense business district is pictured from the top of the Arc de Triomphe, Monday, Feb. 12, 2024 in Paris.

The turbulence began June 9 when voters handed Macron a defeat at the hands of Marine Le Pen’s hard right National Rally party in EU parliamentary elections. Macron promptly and surprisingly called a snap parliamentary election, convinced that French voters would rally to preventArgentina’s Milei meets German officials in controversial lap around Europe“The center has kind of evaporated,’’ said French economist Nicolas Veron, senior fellow at the Peterson Institute for International Economics.

Macron acknowledged that National Rally’s economic pledges “perhaps make people happy,” but claimed they would cost 100 billion euros annually. And the left’s plans, he charged, are “four times worse in terms of cost.’’, the National Rally president gunning to become France’s prime minister in the election, poo-poos the figure cited by Macron, saying it was “pulled out of the government’s hat.” But Bardella has yet to detail how much his party’s plans would cost or to say how they’d be paid for.

Bardella vows to slash sales taxes — from 20% to 5.5% — on fuel, electricity and gas, “because I think there are millions of French people in our country who this year can no longer afford to heat themselves or are forced to limit their trips.” The Paris-based Institut Montaigne think tank estimates the cost of that pledge at between 9 billion and 13.6 billion euros annually in lost revenue. France’s Finance Ministry estimates an even bigger dent in public coffers: 16.8 billion euros per year.

The EU has long insisted that member states keep their annual deficits below 3% of gross domestic product. But those targets have often been ignored, even by Germany and France, the EU’s biggest economies. Macron, who had sought to rein in France’s budget deficits, would have a greatly reduced say over economic policy, though he would still oversee foreign and defense policy. With a leftist or rightwing government calling the shots on economic policy, the country’s budget problems would likely go unresolved, leading to higher yields on French bonds.

 

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