First, some good news. After two years of severe slippage, France's public deficit began to decline gradually, and the target set by the French Prime Minister François Bayrou for the full year no longer seems out of reach. That was the conclusion drawn from the quarterly accounts published on Friday, August 29, by the country's National Institute of Statistics and Economic Studies (INSEE). The bad news: With the government likely to collapse in the middle of budget preparation, the outlook became far more troubling.

For the time being, INSEE's statistics appeared relatively encouraging. After drifting for two years and peaking at 6% of gross domestic product (GDP) in the third quarter of 2024 – double the European Union's (EU) prescribed maximum – the total deficit of the state, local authorities, and social security continued its decline from last autumn. It dropped to 5.4% of GDP by the end of June, the same level as in March. The government's commitment to the public, the EU, financial markets, and credit rating agencies of reaching exactly 5.4% for the year appears attainable.

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