PARIS (Reuters) – The High Council of Public Finances (HCFP) estimated on Wednesday that the government’s objective of a return to a public deficit below 3% of gross domestic product (GDP) in 2027 “lacks credibility” in view of the current deterioration of public finances and economic growth forecasts.
The executive presented this Wednesday to the Council of Ministers its stability program which defines the way in which France intends to reduce its public deficit below 3% of GDP, a requirement of the European Union.
But the task is complicated by the deterioration of the public deficit, which reached 5.5% of GDP in 2023 instead of the expected 4.9%. At the same time, the government revised its economic growth forecast to 1% for this year, compared to 1.4% initially forecast.
“Given the deterioration in the public balance recorded in 2023 compared to the LPFP forecast [loi de programmation des finances publiques] and lower growth hypotheses, the return of the public deficit below three points of GDP in 2027 would imply a massive structural adjustment between 2023 and 2027″, points out the HCFP in an opinion.
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“The High Council considers that this forecast lacks credibility: while such an effort in spending has never been made in the past, its documentation remains incomplete at this stage and its realization requires the establishment of rigorous governance “, he adds.
For the HCFP, the executive plan also lacks “coherence”: “The implementation of the planned structural adjustment will necessarily weigh, at least in the short term, on economic activity, so that the high growth forecasts of the government for the period covered by the PSSA appear inconsistent with the extent of this adjustment.”
According to Bercy, the French public deficit should stand at 5.1% of GDP in 2024, well above the 4.4% initially forecast, before slowing to 4.1% in 2025, to 3.6% in 2026 and 2.9% in 2027.
The government, which has already announced 10 billion euros in savings in February on the state budget, is working on additional measures to reduce spending but has ruled out any increase in taxes.
Asked about the HCFP’s opinion, government spokesperson Prisca Thevenot defended on Wednesday a “safe, coherent and responsible” stability program.
“The stability program which was presented today by the Minister of the Budget is a safe, coherent and responsible program, and which is on a trajectory of 2.9% in 2027,” she declared during the account. -report of the council of ministers.
“This requires, of course, a fairly simple balance between revenue and expenditure (…) We save where we can, we invest where we must,” she added, without giving further details. .
(Report by Leigh Thomas, written by Blandine Hénault)
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