France’s public deficit has finally reached 5.5% of GDP in 2023, INSEE revealed on Tuesday (AFP/JOEL SAGET)
The bill is steep: France’s public deficit finally reached 5.5% of GDP in 2023, INSEE revealed on Tuesday, or some 18 billion euros more than what the government had planned, complicating the The debt reduction objective was nevertheless reaffirmed on Tuesday by the Minister of the Economy.
In a tense budgetary context, the INSEE figure was particularly awaited because every decimal place counts for public finances. Speculation has been rife for a week about the exact figure, particularly since the press reported figures of up to 5.6% of gross domestic product (GDP).
Finally, the deficit exceeds the government’s forecast by 0.6 percentage points, which was forecast at 4.9% of GDP. According to economist Mathieu Plane, interviewed by AFP, “each 0.1 point” of GDP of additional deficit “represents around 3 billion” euros less in state coffers.
“This figure marks a deterioration of 15.8 billion euros compared to the latest forecasts”, indicated on the X network the Minister for Public Accounts, Thomas Cazenave
The increase in the deficit last year is explained in particular by revenues which “slow down significantly in 2023” (+2.0% against +7.4% in 2022), specifies INSEE.
Revenues were “penalized by the slowdown in the economy, new measures on compulsory deductions, and a decline in transfers received”, details the institute, reporting taxes “almost at a standstill”, increasing by “only by 0.3%” compared to 7.9% in 2022. VAT revenue, in particular, “slows down significantly to +2.8% after +7.6%”.
– The “discredited” Mayor? –
“Mr Macron is responsible for this disastrous balance sheet!”, Republican boss Eric Ciotti reacted on X, referring to a “swan song” of public finances.
“The government’s policy is in a situation of failure”, added on Public Senate the budget rapporteur in the Senate, Jean-François Husson (LR), for whom the Minister of Economy and Finance “Bruno Le Maire is discredited and discredited, its responsibility is engaged”.
“It is a collapse of France’s authority in Europe,” he judged, while France, third among the most indebted countries in the euro zone, promised its European partners to bring its deficit below 3% of GDP in 2027.
“My determination to restore public finances and get the public deficit back below 3% in 2027 is intact, I would even say that it is total,” replied Bruno Le Maire on RTL.
President Emmanuel Macron (l) listens to his Finance Minister Bruno Le Maire (d) at the Elysée, Paris, March 10, 2023 (POOL/AFP/Kin Cheung)
However, the delay accumulated in 2023 will weigh heavily in 2024 and subsequent years. Starting from a 5.5% deficit, the “step to take” to reach 3% is “all the higher”, Mathieu Plane noted to AFP, “it will be very difficult to achieve”.
The first president of the Court of Auditors Pierre Moscovici regretted on Tuesday the “significant” and “very, very rare” slippage in France’s deficit.
– “A lot of composure” –
This will require “additional efforts, more determination, a lot of method and a lot of composure”, conceded Tuesday morning Bruno Le Maire, while reaffirming his opposition “to any tax increase”.
Guest on TF1’s news on Wednesday, Prime Minister Gabriel Attal will discuss “the question of the deficit”, the channel said on Tuesday.
A new turn of the budgetary screw will be necessary, President Emmanuel Macron warned on Friday.
Ten billion euros of cuts were made in mid-February on the 2024 state budget. But it will be necessary to complete the adjustment “in all useful actions of public spending”, he indicated, targeting in particular expenditure social or local communities.
The President of the National Assembly Yael Braun-Pivet in Paris, June 6, 2023 (AFP/bERTRAND GUAY)
In mid-March, Thomas Cazenave estimated that it would be necessary to find “at least 20 billion” euros in savings for 2025, and announced new reviews of public spending, in particular those linked to long-term illnesses, aid to cinema or even absenteeism in the public service.
This portends an “unprecedented bleeding on public finances”, regretted Manuel Bompard (LFI) on France 2, seeing in the INSEE figure a “scathing disavowal”, which would be “first of all the balance sheet of Emmanuel Macron.
Rather than affecting public spending, he advocates “an increase in revenue by concentrating tax increases on the richest”.
Several deputies from the majority, the President of the National Assembly Yaël Braun-Pivet (Renaissance) in the lead, have also spoken in recent days of targeted tax increases or aimed at superprofits.
Concerning the French debt – 110.6% of GDP at the end of 2023, against 109.7% initially planned -, “we must assume to say” that there is a part that “we will not repay”, estimated Manuel Bompard.
© 2024 AFP
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