The history of teaching on the question of public finances is one of failure. Neither economists, nor journalists, nor the few politicians who understood the scope of the subject have managed to convince our fellow citizens that there was a problem that could obliterate the future of our country. And it’s true, the notions put forward are too abstract. A public deficit which represents 5% of GDP. What does this mean in practice? And then 5%, it’s ultimately not huge. And a debt of 110% of GDP? After all, as soon as we take out a mortgage, we find ourselves with an outstanding debt greater than our income. So where is the problem?
But there is indeed a problem. This week I will therefore try to consider the question differently, by analyzing the revenue and expenditure of the State in 2023. The Ministry of Public Accounts has just published the accounts for December 2023 a few days ago, which allows us to ‘have a vision of the whole of last year. These figures are limited to the State, that is to say they do not take into account social security or local authorities. In any case, their finances do not pose a problem.
A city, department or region does not have the right to vote for an unbalanced operating budget. Only investment can be financed by debt. In this respect, it is striking to note that the State is so often inclined to give lessons in sound management to local authorities when it would be quite incapable of imposing the legal financial constraints to which they are subject. The State invests almost nothing, and its deficits are colossal.
Austerity is a fable
In 2023, the state deficit rose to 173 billion euros. This is 22 billion euros more than in 2022. We can already notice that this figure is very close to that of 2020, the year of Covid which was that of “whatever it takes”. We could therefore be led to think that Covid has plunged us into a chronic “whatever it takes”. It will take a lot of courage and teaching to get out of this. In 2023, the State spent 454.6 billion euros, 2 billion more than in 2022. Austerity is therefore a fable. Our state is always spending more. For their part, public revenues represented 348 billion euros, down 6 billion. The reason: the reduction in corporate tax yield due to rising energy costs which has reduced profits. Less wealthy companies mean a poorer state.
What can we learn from these figures from a financial analysis point of view? That 37% of state expenditure was financed on credit. This is a concrete, colossal figure, which gives the scale of the financial problem he faces. To return to balance, the State would therefore have to reduce its spending by almost 40%. This seems impossible, even in the medium term, but it allows us to understand that the effort requested by Bruno Le Maire, namely to find 12 billion euros this year, is laudable but very far from what would need to be done to start to to be serious.
Can we continue like this? Yes. We can live with such deficits, even gigantic ones, as long as we find creditors to lend to us. And we find some: because France’s economic activity is not moribund, because the tax collection rate is one of the highest in the world, because our bond market is deep and liquid. Simply, the State is no longer indebted at 0% as in the time of the pre-Covid economy but at 2.7% over ten years, which means that an ever greater share of our taxes pays the interest on the debt. In 2027, according to the Court of Auditors, this budget item will be the first item of State expenditure, ahead of education, defense, security or ecological transition. This is the real problem, this is where financial cowardice leads us: to the impossibility of public action in all these areas and to the inevitable erasure of decision-making in favor of communication, which costs nothing financially.
Nicolas Bouzou, economist and essayist, is director of the consulting firm Astères
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