France urges Germany to boost fiscal spending

Summary:

France presents its 2020 budget with abundant tax cuts
The budget has been built on an assumption of only tiny growth deceleration
Expansionary monetary policy has made taking on new debt much more attractive

It has not been the first time when Germany is urged to loosen its purse strings in order to shore up its flagging economy. Voice came from France this time round where we were offered a 2020 budget yesterday. Overall, the French government expects quite abundant tax cuts which are expected to amount 1 billion EUR for business and up to 9 billion EUR for households. As a result of these steps, the next year's budget deficit is expected to amount 2.2% of GDP, down from 3.1% projected for this year as the country was affected by yellow-vest protests. In turn, the structural deficit, which excludes the impact of the economic cycle and other one-offs, is expected to stay broadly unchanged at 2.2%. However, the budget has been built on quite a demanding assumption of an economic growth deceleration only to 1.3% from 1.4% projected this year. In our view, this poses a downside risk for this budget meaning the country could see its next year's budget gap even closer to 3%.

On top of that, France, which does not seem to have more fiscal space, has urged Germany to follow its footsteps with fiscal stimulus in order to boost economic growth. French finance minister Bruno Le Maire said that the latest ECB’s steps created an opportunity for governments to take on new debt. Moreover, he added that “Germany needs to invest and to invest now, the sooner the better. Let’s not wait for the situation to get worse,”. Let us notice that France is among EU countries having the least fiscal space to boost spending given its 3% general government deficit as well as public debt hovering around 100% of domestic output. At the same time, we think that countries like Germany, the Netherlands and Austria hold the largest fiscal buffer, hence these countries should among the leaders preventing a deeper economic downturn.

Germany has its yield curve below the zero line while France could borrow at no cost up to 15 years. Source: Bloomberg

31 October 2025, 7:08 PM

Daily summary: Sentiments on Wall Street stall at the end of the week🗽US Dollar gains

31 October 2025, 4:33 PM

Fed's Bostic and Hammack comment the US monetary policy 🔍Divided Fed?

31 October 2025, 4:23 PM

Scott Bessent sums up the US trade deal with China🗽What will change?

31 October 2025, 3:26 PM

Fed members comment on US economy 🗽US dollar gains

economic reports

Cookie name	Description
SERVERID
userBranchSymbol	Expiration date 1 day
test_cookie	Expiration date 1 hour
adobe_unique_id	Expiration date 364 days
__hssc	Expiration date 1 hour
SESSID	Expiration date 1 day
__cf_bm	Expiration date 1 hour
intercom-id-iojaybix	Expiration date 270 days
intercom-session-iojaybix	Expiration date 6 days
xtbCookiesSettings	Expiration date 364 days
TS5b68a4e1027
countryIsoCode
xtbLanguageSettings	Expiration date 364 days
userPreviousBranchSymbol	Expiration date 364 days
intercom-device-id-iojaybix	Expiration date 270 days
__cfruid
_cfuvid

Cookie name	Description
_gid	Expiration date 1 day
_gat_UA-98728395-1	Expiration date 1 hour
_gat_UA-121192761-1	Expiration date 1 hour
_gcl_au	Expiration date 89 days
_ga_CBPL72L2EC	Expiration date 729 days
_ga	Expiration date 729 days
__hstc	Expiration date 179 days
__hssrc
_vwo_uuid_v2	Expiration date 365 days
_ga_TC79BEJ20L	Expiration date 729 days
_vwo_uuid	Expiration date 365 days
_vwo_ds	Expiration date 29 days
_vwo_sn	Expiration date 1 hour
_vis_opt_s	Expiration date 99 days
_vis_opt_test_cookie
af_id	Expiration date 394 days
afUserId	Expiration date 730 days
AF_SYNC	Expiration date 6 days
AnalyticsSyncHistory	Expiration date 29 days

Cookie name	Description
MUID	Expiration date 389 days
_omappvp	Expiration date 3998 days
_omappvs	Expiration date 1 hour
_uetsid	Expiration date 1 day
_uetvid	Expiration date 389 days
_fbp	Expiration date 89 days
fr	Expiration date 89 days
_ttp	Expiration date 89 days
_tt_enable_cookie	Expiration date 89 days
hubspotutk	Expiration date 179 days
IDE	Expiration date 389 days
YSC
VISITOR_INFO1_LIVE	Expiration date 179 days
li_sugr	Expiration date 89 days
guest_id_marketing	Expiration date 729 days
guest_id_ads	Expiration date 729 days
guest_id	Expiration date 729 days
muc_ads	Expiration date 729 days
VISITOR_PRIVACY_METADATA	Expiration date 179 days
MSPTC	Expiration date 389 days

Cookie name	Description
bcookie	Expiration date 364 days
lidc	Expiration date 1 day
UserMatchHistory	Expiration date 29 days
bscookie	Expiration date 364 days
li_gc	Expiration date 179 days
personalization_id	Expiration date 729 days

France urges Germany to boost fiscal spending

Summary:

Join over 1 700 000 XTB Group Clients from around the world