The High Council of Public Finances (HCFP) on Wednesday judged “high” the growth forecast of 1.4% on which the government is relying to construct its 2024 budget, and considered “optimistic” the public deficit forecast which according to the The executive would reach 4.4% of GDP in 2024.
On the other hand, he considers the government’s inflation forecast of +2.6% in 2024 “plausible”, after 4.9% this year.
As for public spending, it “risks turning out to be higher than expected, particularly with regard to the cost of energy devices and health spending”, worries the HCFP in its opinion relating to the draft finance and development laws. financing of Social Security (PLF and PLFSS).
This independent body attached to the Court of Auditors notes that the consensus of economists (+0.8%) and the organizations it consulted is lower than the government’s expectations in terms of growth. The OECD and the European Commission forecast 1.2%, the Banque de France 0.9% and the French Observatory of Economic Conditions (OFCE) 0.8%, he recalls.
He also points out “the significant uncertainties surrounding the analysis of the economic situation, in particular due to the current difficulties in understanding numerous behaviors” such as the high level of the savings rate or the low productivity.
The High Council judges the revenue forecasts for 2024 to be “a little overestimated”, according to it being driven upwards by the optimism of growth projections and “favorable hypotheses” on the yield of certain taxes such as VAT.
As for spending, “despite the extinction of support measures” for the economy linked to the Covid pandemic and the consequences of the war in Ukraine, he notes that they will progress more in 2024 than recommended by the Union European.
After falling from 111.8% of GDP in 2022 to 109.7% this year “thanks to unusually strong growth in GDP in value”, public debt is expected to remain at this “high” level in 2024.
“The expected stabilization in 2024 of the debt ratio is fragile, since it is based on optimistic forecasts of growth and spending,” judges the High Council.
“The medium-term sustainability of public finances therefore continues to call for the greatest vigilance,” underlines the HCFP, for which France must return “to debt levels (it) allowing it to have sufficient room for maneuver” to face “ macroeconomic or financial shocks” and expenses linked to the ecological transition.