These figures were eagerly awaited, and confirm the concerns that have been growing for several days. INSEE published this Tuesday morning the final figures for the public deficit for the year 2023. And as feared, this is “significantly” higher than that initially planned, even in the words of the government in recent weeks, rising has 5.6% of GDP, compared to 4.9% in all forecasts so far.
This figure is very slightly lower than that revealed the general rapporteur of the Senate Finance Committee, Jean-François Husson, who made a surprise visit to Bercy last Thursday, using the power of control granted to him by his position and who predicted a deficit of 5.6% for 2023. He then denounced the government’s “disastrous budgetary management”, accusing it of being “incapable of following the budgetary trajectory that he himself had adopted”. It must be said that this level of public deficit places France among the poor performers of the European Union, far from countries like Portugal or Denmark, with a budget surplus, Germany, or even Spain.
The third most indebted country in the euro zone, France is not the worst performer in Europe in terms of public deficit for the year 2023, with Italy and its 7.2% looking like a scarecrow. But this new announcement remains very bad news for Bercy. Notably because it keeps France a little further away from its objective of falling below the 3% deficit mark before 2027, a line that the Minister of the Economy Bruno Le Maire promised last Friday to maintain “at all costs”.
“It will be very difficult to achieve”, warns economist Mathieu Plane to AFP, because “the step of the staircase to return below 3% will be all the higher” as the 2023 deficit will be high . This was why the figure published by INSEE was so eagerly awaited, because every decimal place counts. “To put it simply, each 0.1 point” of GDP of additional deficit in 2023 “represents around 3 billion” euros missing from state coffers, explains the economist.
5.7% deficit in 2024?
The budgetary rules of the European Union have certainly been relaxed at the start of 2024, with a renegotiation of the Stability and Growth Pact which had been in place since 1997 and the end of the 3% public deficit rule and 60 % of public debt. But this announcement places France ever more in opposition to so-called “frugal” countries, such as Germany, the Netherlands and Denmark, supporters of much stricter budgetary rigor within the EU.
Especially since the other figures for the coming years gleaned by Senator Jean-François Husson at Bercy do not really encourage optimism, counting on a deficit of 5.7% in 2024 (compared to 4.4% currently forecast) and 5.9% in 2025 (compared to 3.7%). “These are not forecasts, but technical notes which do not necessarily include additional measures, nor the revision of a certain number of macroeconomic indicators which fluctuate over time,” he wanted to reassure AFP the deputy Jean-René Cazeneuve, general rapporteur of the Budget to the National Assembly all these last years at the National Assembly. Nevertheless admitting a “very significant departure from what was planned” and a situation which is “worrying”.
New budget cuts planned
This situation rekindles the debate on the best way to stabilize public finances within the majority itself, between raising taxes and increasing revenues, or on the contrary budget cuts and reducing spending. While certain members of the majority, such as the president of the National Assembly Yaël Braun-Pivet or the president of the MoDem François Bayrou, have outlined the idea of an increase in certain taxes, notably taxes on superprofits, the idea seems for the moment to be ruled out by Bruno Le Maire.
There is no question of “deviating from our economic line”, retorted the Minister of Economy and Finance, pleading for better control of public spending after having already announced 10 billion savings in the State budget last February . An effort “to be completed”, in the words of Emmanuel Macron, while the government hopes to achieve 20 billion savings in 2025. Whatever the choices, the situation should require changes.