France’s public deficit reached 5.5% of GDP in 2023, at 154.0 billion euros, INSEE revealed on Tuesday, much more than the 4.8% deficit achieved in 2022 and that the 4.9% initially planned by the government for 2023.
This slippage is explained in particular by revenues which “slow down significantly in 2023”, up 2.0% against +7.4% in 2022, explains the National Institute of Statistics and Economic Studies in a press release. They were “penalized by the slowdown in the economy, new measures on compulsory deductions, and a decline in transfers received”, specifies the institution, referring to taxes “almost at a standstill”, increasing “only by 0 .3% (+2.8 billion euros) after +7.9% in 2022.” VAT revenue, in particular, “slowed down significantly to +2.8% after +7.6%”.
Expenditures have also slowed down “a little”: “they increase by 3.7% after +4.0% in 2022”, indicates INSEE. “As a proportion of GDP, spending continues to decline and stands at 57.3% of GDP after 58.8% in 2022,” he specifies, but they remain “significantly higher than before Covid ( 55.2% of GDP in 2019).
Operating expenses (+6.0%) and social benefits are “accelerating” (+3.3%, after +1.2% in 2022), driven “by the revaluation of benefits indexed to inflation”, indicates the institution. “Remuneration paid is also accelerating: +4.6% after +4.4%, with the full-year effect of the index revaluation of July 2022, the revaluation of July 2023, and public employment more dynamic than in previous years “, it is specified.
French debt reaches 110.6% of GDP at the end of 2023
The INSEE figure on the deficit was particularly awaited because every decimal place counts for public finances. “To put it simply, each 0.1 point” of GDP of additional deficit in 2023 “represents around 3 billion” of euros missing from state coffers, economist Mathieu Plane explained to AFP.
The government had warned at the beginning of March that the deficit would be “significantly” higher than the 4.9% initially forecast and speculation had been rife for a week on the exact figure, notably since the press’s mention of a deficit at 5.6% of GDP.
French public debt reaches 110.6% of GDP at the end of 2023, said the National Institute of Statistics and Economic Studies. This is less than in 2022, when it stood at 111.9%, but almost a percentage point above the government’s forecast (109.7%).
“An intact determination”
The Minister of the Economy Bruno Le Maire assured Tuesday that his determination to bring the French public deficit below 3% of GDP in 2027 was “intact and total”.
Public finances “must be restored”, observed Mr. Le Maire, mainly attributing the situation made official on Tuesday by INSEE to lower revenues than expected. “Believe me, my determination to restore public finances and get back below the 3% public deficit in 2027 is intact, I would even say that it is total,” he assured, stressing that this would involve “ extra effort, more determination, a lot of method and a lot of composure.”