The High Council of Public Finances (HCFP) called on the government on Thursday, April 13 for “resolute action” to contain public spending, at the risk otherwise of seeing its debt become unsustainable, in an opinion on a bill relating to the 2022 budget. “A significant reduction in the structural deficit is necessary to reduce France’s exposure to a risk of unsustainable debt”, writes the independent body placed with the Court of Auditors, responsible for assessing the credibility of the trajectory public finances.
“While new public expenditure will have to be financed, in particular for energy transition and investments to strengthen growth, and under the sectoral programming laws voted or tabled, it requires resolute action on public expenditure”, adds he.
A deficit of 4.7%
Seized for an opinion by the government on its draft budget review law for 2022, which aims to validate the public accounts of last year, the HCFP notes that the level of this public expenditure in relation to GDP “remained in 2022 significantly higher than its pre-crisis level. The public deficit reached 4.7% of gross domestic product (GDP) in 2022, i.e. 124.9 billion euros, much more than in 2018 (2.3% of GDP), under the effect of the increase in public spending, inflated by the “whatever the cost”.
Strongly disturbed by the health crisis, the economic situation was “in the process of normalizing” last year, despite the war in Ukraine, underlines the HCFP. He therefore calls on the government to “quickly specify the conditions for lifting the exceptional circumstances clause”, which had allowed France to temporarily derogate from the European budgetary rules of the Stability Pact.
These rules, put on hold during the crisis, will be reactivated by the European Commission at the end of 2023. They limit budget deficits to 3% and public debt to 60% of GDP. “The maintenance until the end of 2023 of the general derogation clause of the Stability and Growth Pact […] should not lead to the postponement of the implementation of deficit reduction efforts”, insists the HCFP.