France's budget deficit worsens to 5.5 percent of GDP

France's finance minister has said diminishing tax revenues combined with slowing inflation caused the nation's budget deficit to grow to 5.5 percent of GDP last year, instead of the 4.9 percent the government had predicted.

But Bruno Le Maire insisted the disappointing news unveiled by the Insee national statistics institute on Tuesday does not mean France is spending too much on public services, or that its economic growth has faltered.

He said officials must now look for ways to cut government spending and reduce total public debt, which stands at 110 percent of GDP, or 154 billion euros ($167 billion).

"I am calling for a collective wakeup call, to make choices in all of our public spending and make choices to keep useful, effective programs, and abandon anything that is not," the Financial Times quoted him as saying.

The growing budget deficit will have been bad news for President Emmanuel Macron, who will be campaigning ahead of both European Parliament elections and French Parliament elections this summer on his government being a safe pair of hands for the economy.

Macron has vowed to erase the budget deficit through increased growth created by his business-friendly reforms and he was on track during his first four-year presidency. But during his second term, the novel coronavirus pandemic triggered a huge increase in government spending that has trashed his targets.

Le Maire said he plans to meet opposition party leaders on Thursday, to seek consensus and ideas on how to make public spending cuts. But he has already ruled out raising taxes to pay for the higher-than-anticipated government spending.

He said this week he will get to grips with the deficit that has been growing for 50 years due to what he described as successive governments seeing public spending as "the answer to every problem, when it is not".

Le Maire made 10 billion euros of spending cuts in February but experts say he may need to slash 50 billion euros of spending if he is to make ends meet.

Despite the difficult situation, he still insists that, by 2027, he will ensure France hits the European Union's target of limiting debt as a share of GDP to 3 percent.

Le Maire had clearly been preparing people for Tuesday's bad news for some time, having told Le Monde newspaper on March 6 that "due to the loss of tax revenue in 2023" the deficit-to-GDP percentage would be "significantly above 4.9 percent". And he told RTL radio tax revenue had fallen by 21 billion euros in 2023 and that inflation, which usually boosts tax revenue, had slowed.

"There was not more public spending than we had said, there was less revenue than forecast," he added.