A copy to review again this year. The High Council of Public Finances released this Monday, September 25, his opinion on the new version of the 2023-2027 public finance programming bill. This aims to accelerate the government’s objectives in terms of debt reduction and deficit reduction. Already last year, this institution, attached to the Court of Auditors, was harsh with the executive, whose plan was then rejected by the National Assembly.
The bill plans to reduce the public deficit from 4.8% of gross domestic product (GDP) in 2022 to 2.7% in 2027. A significant drop but which would remain below the 3% objective requested by the Union European. “The trajectory presented by the government remains unambitious in view of France’s European commitments,” underlined the HCFP in its opinion. Same observation for public debt, which would decrease by a little less than 4 points by 2027, to 108.1%, still well above the European limit of 60%. exceeded since the end of 2002.
“Optimistic” scenarios
Not only would this bill not make it possible to quickly return to the points of the Maastricht Treaty, but it would also rely on “favorable” hypotheses. The executive’s growth forecast for 2023, +1%, is considered “plausible”, but that announced for 2024 is “high” and higher than the consensus of economists, located at 0.8%. And this, while the government revised it downwards by 0.2 points to 1.4%.
Growth of 1.7% in 2025 and 2026, then 1.8% in 2027 is also optimistic, because the bill counts on maintaining a high rate of business investment, a positive contribution from foreign trade and a decline in the household savings rate, which would increase consumption. However, these scenarios are not at all certain. The Central Bank has increased interest rates to combat inflation, making borrowing more expensive. The global market remains uncertain due to geopolitical, financial and health risks. And high inflation, even if it is falling, is a major obstacle to household consumption.
Get out of debt for the ecological transition
Emmanuel Macron has made balancing public finances one of the priorities of his second five-year term. A failure to achieve this objective would be a political defeat, while several of our neighbors have already or will soon achieve this, such as Germany. But it would also pose serious problems for state action. “Debt reduction is a categorical imperative” in order to “create room for maneuver” allowing France to face new economic shocks and invest in the ecological transition,” insisted Pierre Moscovici, president of the HCFP.
The opinion of the HCFP is only advisory and it is up to Parliament to decide. The bill will begin to be discussed during the extraordinary session of the National Assembly on Wednesday and Thursday, at the same time as the presentation to the Council of Ministers of the 2024 Budget. To convince the deputies, the government will argue that this text depends obtaining billions of euros in European funds from the recovery plan. In the absence of a majority, like last year, the government could use section 49.3 to adopt it.