France Freezes 5 Billion Euros of Public Spending

France Freezes €5 Billion in Public Spending Amid Deficit Concerns

PARIS (Reuters) - France is freezing 5 billion euros ($5.5 billion) of public spending to keep its deficit reduction plans within reach amid slowing growth and uncertainty due to U.S President Donald Trump's tariffs, said budget minister Amelie de Montchalin.

The French government aims to cut its public sector budget deficit to 5.4% of economic output this year from 5.8% in 2024, but the increasingly uncertain growth outlook is making that challenging.

"Just as a household sets aside money for difficult days ahead, today I can say that we are giving ourselves 5 billion from extra efforts, via spending that will not be carried out, spending that will be pushed back, spending that will be re-allocated," Montchalin told BFM TV.

"And those 5 billion that we are going to either cancel, delay or re-direct, that will be our response to this unstable world," she added.

Finance Minister Eric Lombard opened the door on Friday to letting deficit reduction target slip this year if the trade war hits the economy hard, ruling out extra spending cuts to offset a potential shortfall in growth.

Bank of France Governor Francois Villeroy de Galhau said that France should stick to the current deficit target, adding that any slippage would have to be made up for later.

The government is due to update its long-term growth and deficit forecasts next week when it sends its annual economic planning programme to the European Commission.

"Whatever happens, the right path to take is the one of debt-cutting," Montchalin said.

($1 = 0.9042 euros)

(Reporting by Sudip Kar-Gupta, additional reporting by Leigh Thomas; Editing by Dominique Vidalon and Hugh Lawson)