'Dangerously exposed' France must slash debt - national audit office

France's ailing public finances and its $168 billion deficit figure leave the euro zone's second-biggest economy "dangerously exposed" in case of a new macroeconomic shock, the national public audit office has revealed.

The warning from the audit office, known as the Cour des Comptes, comes at a delicate time for President Emmanuel Macron's government after this month's parliamentary election.

The election resulted in a hung parliament. While no party won an outright majority, the far-right National Rally (RN) and the New Popular Front left-wing coalition performed well, with both blocs promising big public spending programmes.

The audit office reiterated it was vital for France to reduce its public deficit, which rose to $168 billion in 2023 from $137 billion in 2022.

"Due to delays in making real structural reforms, the cost of public debt, which has been exacerbated by recurring deficits and the weight of these deficits, has become more and more expensive," it said.

"This has hampered other spending, hinders the ability to make investments and leaves the country dangerously exposed in case of a new macroeconomic shock."

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Pierre Moscovici, the former French finance minister who heads the Cour des Comptes, highlighted the rising costs of servicing France's debts.

"We already pay 52 billion euros [$56.7bn] a year to pay it back. We will be paying 80 billion euros [$87bn] to repay it in 2027," Moscovici told France Inter radio. "This means that there is no longer any room for manoeuvre to do the rest, for education, justice, security and financing the ecological transition."

The audit office said France's public financing programmes did not adequately take into account costs linked to policies aimed at protecting the environment, such as using more renewable energy, and that this marked a "major negative shock."

It said the extra investments needed for such policies were estimated to bring further annual costs of $65.4 billion a year by 2030.

Last September, France's RTE grid operator said massive short-to-medium term investments were needed in the power sector as the country aims to reduce its carbon emissions further and continue the switch from fossil fuels by 2050.

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