The much awaited Finance Bill 2025 was introduced by the new government last week. Prime Minister Michel Barnier has committed to reducing the deficit to 5% of GDP next year, thanks to a €60.6 billion effort aimed mainly at businesses and tax increases.

If France is up against the wall in budgetary matters, other European countries have already found themselves in the same position and succeeded in cleaning up their public accounts. Overview of these countries that managed to get back on track.

Sweden: Privatization and Pension Reform

Sweden was not doing well in the 1990s. A serious crisis is rocking the country with bankruptcy, a significant decline in GDP, soaring public debt and massive unemployment. Today, with the public deficit at 0.6% of GDP, everything is fixed.

To achieve this, the country carried out fundamental reforms and opened up many sectors to the private sector: education, post, telecommunications, retirement homes, employment agencies, etc. Access to unemployment insurance was tightened and sick leave compensation was reduced. Its pension system has been reformed.

“Sweden has a points system, one that Emmanuel Macron wanted in 2018,” notes economist François Facchini. In this system, the amount you contribute determines your retirement pension. If you pay less, you get less. »

In 1998, Sweden also introduced a capitalization component in its pensions. A basic pension financed by distribution, a supplementary pension by capitalization and a minimum pension for the most vulnerable, accessible from the age of 65.

These reforms were mainly the work of conservative governments. But the Social Democrats also spent sparingly. For example, they have distributed less aid than France during the pandemic. Today, in addition to healthy finances, the country maintains high public spending and low levels of inequality.

Portugal: Severe austerity plan

A former poor student, Portugal is now top of the class in budget management. The Portuguese state ended last year with a surplus of 1.2% of GDP.

However, the land of pastel de nata has come a long way. In 2011, Lisbon, hit by the financial crisis, obtained a €78 billion loan from international creditors. Alternatively, Prime Minister Pedro Passos Coelho (center right) initiates fiscal austerity.

“The economic situation in Portugal in 2011 is eerily similar to that of France today,” agrees Eric Pichette, a public finance expert at Kedge Business School. So, to meet the deficit of more than 8 percent of GDP, the salaries and retirement pensions of government employees are drastically cut. A reduction in costs and an increase in revenue, thanks to the VAT increase, which is now higher than in France.

The Socialist government elected in 2015 ended severe austerity but continued tight budget management.

Ireland: Liberal Diving

Ireland will exhibit better economic health in 2024. This was not always the case. After the global crisis of 2008, the island is on the verge of collapse. The public deficit increased from 7% in 2008 to 14% in 2009 and 32% in 2010. The country came under international scrutiny.

Therefore, Ireland adopts the liberal model without restriction. Civil service numbers are falling, salaries are falling, working hours are increasing, social spending is frozen, then reduced, and the retirement age is raised to 66 in 2014.

“Unemployment and retirement represent a large part of public expenditure in all countries. The more assets you have, the lower your costs,” says Francois Facchini, a specialist in public spending.

Therefore, to attract businesses, the country decides to drastically reduce its corporate tax (12.5% ​​vs. 25% in France). Multinational companies like Facebook, Apple and Microsoft are starting to do business. “Thanks to a bunch of accounting transfers with other countries, they pay less tax there,” explains François Facchini.

Although most of their production takes place in other European countries, Ireland reaps a portion of the profits, drawing strong criticism from the rest of Europe. Corporation tax brings in about a third of Irish tax revenue.

The Emerald Isle today records a budget surplus of €24 billion, a budget that would make any European country green with envy.