France Promises to Lift Spirits with Tax Hikes, Just in Time for Ratings to Take a Nose Dive!

In a bold move reminiscent of a magician pulling a rabbit out of a hat—only this rabbit is made of tax hikes and spending cuts—a freshly minted French government has unveiled a draft budget for 2025 that’s set to play a game of economic Monopoly with an impressive €60 billion ($65.6 billion) price tag. Unfortunately, analysts have already warned that this package may be as effective as using a band-aid on a gunshot wound when it comes to avoiding those pesky ratings downgrades.

This budget plan appears to prioritize taxing over spending, as if the government woke up one day and decided that the best method of reducing deficits was to invite wealthy corporations to a very exclusive tax party—BYOB (Bring Your Own Billions). Don’t worry though; everyone else gets to throw in a little extra surcharge on their airline tickets and put a pinch on electricity so they can feel the joy of contributing to financial stability.

Among the budget highlights—if one could call them that—are reconciliation efforts like delaying inflation adjustments for pensions and making cuts in places like local government and the healthcare system. Truly, who knew that making life moderately unbearable could qualify as good economic strategy?

To spice things up even further, they’re targeting corporations making over €1 billion a year; who knew that large shipping firms could be such prime suspects in France’s financial crime spree? As for those households bringing home more than €500,000? Welcome to the tax hall of fame! The government has rolled out the red carpet and slapped a surcharge on your incomes, probably while whispering sweet nothings about “sustainable fiscal policy.”

Not to be outdone, the government is aiming to slice the deficit forecast from a juggernaut 6.1% of GDP down to a manageable 5%. Think of it as the financial equivalent of trying to squeeze into last year’s jeans after a long holiday season—everyone is just pretending it’s going to work out in the end. Their new deadline? 2029! Because who doesn’t love a good game of delayed gratification?

Political Gymnastics

Meanwhile, Prime Minister Michel Barnier bravely traverses the political battlefield like a gymnast attempting a triple somersault on a rickety balance beam, already surviving a vote of no confidence this week. His government was cobbled together faster than IKEA furniture after a night of heavy wine, succeeding in snagging the majority of seats—while failing to actually deliver a solid majority.

The budget’s introduction is merely a ‘starting point’ to be debated, or as politicians like to call it, ‘Let’s throw it against the wall and see what sticks’—or doesn’t. The rhetoric around pension debates is heating up, which is unsurprisingly on brand for a country steeped in passionate discussions about their wine, cheese, and, oh yes, their retirement plans.

Taxation: The New French Cuisine

Notably, it seems the recipe for the 2025 budget leans heavily towards “bon appétit” for tax increases rather than cuts to spending—something Goldman Sachs analysts have flagged. They’re as amused by the government’s ability to pull 60 billion from thin air as they would be watching a magician’s finale gone wrong. They note, “The government hopes you’ll ignore the fact that we’ve never found that much money in one year. But hey, who needs credibility anyway?”

And don’t even get us started on the poor household squeezing their budget into tighter jeans. Taxes are already hefty in France—second highest in Europe!—which raises the question: just how much can they squeeze before someone pops?

The proposed budget is set up for a fascinating fiscal tango: 40 billion euros in spending cuts and 20 billion in tax increases. It’s like a financial version of peek-a-boo, where we all pretend we won’t feel the pinch when the cuts come down like a guillotine on a bread line.

The Ratings Report Card

While everyone puts on their happy faces and dutifully pretends that austerity will lead to some sort of economic wonderland, questions loom over what this will mean for growth. As credit agencies sit like wary parents waiting for their child to return home, the government is making gentle assurances that very promise to keep things from tanking. History, however, whispers back, “Sure, but remember that time you made your child survive on a diet of Brussels sprouts?”

Economists have already predicted a slip into negative GDP growth as effectively as one can predict the soap opera storyline of French politics: booming taxes and dwindling returns. Late-night economists might even start placing bets on when the next downgrade will hit the headlines—because let’s face it, it’s not just a matter of if, but when.

As for the public, well, they’re just going to have to keep calm and hope for the best—just like they’ve been doing throughout the debacle of 2024. The question remains: will the government lastly see sense, or will they need to brush off their tuxedos for a full-blown financial disaster dance party? Stay tuned.