In February 2024, France exported €50.3 billion worth of goods, while its imports amounted to €56.3 billion, equating to a trade deficit of €6 billion.
Essentially, a country that imports more goods and services than it exports in terms of value has a trade deficit or a negative trade balance. Conversely, a country that exports more goods and services than it imports has a trade surplus or a positive trade balance.
The latest data from France’s statistical office comes after the Bank of America warned of inevitable excessive deficit procedures for France – and others.
“Many things fiscal are making a return in Europe at the moment, with France and Italy in particular on the market’s radar,” noted Bank of America in a recent report.
Just before Easter, France disclosed a 5.6% budget deficit for 2023, largely due to weaker-than-expected revenues, which is expected to push the country’s debt-to-GDP trajectory higher.
What is the Excessive Deficit Procedure?
As explained by market analyst Piero Cingari for Euronews, the excessive deficit procedure compels member states to amend significant deficit and/or debt levels as mandated by Article 126 of the Treaty on the Functioning of the European Union.
The procedure can be initiated by the European Commission if a country has breached or is at risk of breaching the deficit threshold of 3% of GDP, or if it violates the debt rule by maintaining a government debt level above 60% of GDP that is not decreasing at a satisfactory pace.
However, an excessive deficit procedure for France, and other member states “is almost inevitable now,” according to Bank of America. This would necessitate more stringent monitoring and implementation of consolidation efforts from 2025 onwards.
After the procedure is triggered, Cingari explained, France will need to undertake a steady budget correction of at least 0.5 percentage points per year in structural terms from 2025, as calculated by Bank of America economist Ruben Segura-Cayuela.
“The risk remains that countries could be compelled into sharp fiscal corrections and structurally tight fiscal policies, potentially hampering economic growth going forward,” Cingari added.
