French Prime Minister Sébastien Lecornu has confirmed the expansion of state aid to alleviate the increase in fuel prices. The new plan could cost between 1.2 and 1.7 billion euros annually. However, the government has not specified how this expenditure will be financed nor what cuts will be applied to cover the bill.
The technical dilemma of financing subsidies without hindering development 🧐
From an economic standpoint, injecting between 1.2 and 1.7 billion euros without a clear source of revenue creates an imbalance in public accounts. To avoid increasing debt, the government would need to reallocate funds from other ministries, such as the ecological transition or infrastructure ministries. This could delay sustainable mobility or network digitalization projects, which are key to reducing long-term dependence on fossil fuels.
The magic of creating money out of thin air (without recipes) 🪄
The plan is simple: we spend 1.7 billion, but don't ask where it comes from. It's like when you fill up your car's tank and say you'll pay next month, but you know your account is in the red. The French government has discovered the formula for money to appear by magic. Or perhaps it expects citizens to pay for gasoline with the same faith with which it promises to finance it.