Every year since 2013, the exercise is particularly feared near Bercy. Before presenting its finance bill for the following year, as required by the law resulting from the 2012 European treaty, the government refers the matter to the High Council of Public Finances (HCFP) so that it can issue an opinion on the new version. . Usually the report is published at the end of September. Dissolution and new executive appointed late, it was only on October 10 that this independent body ruled on Michel Barnier’s first budget proposal.
In its detailed remarks, the HCFP is, to say the least, harsh with the government scenario. He first judges his growth forecast of 1.1% for 2025 “a little high given the restrictive orientation of the associated public finance scenario”. Above all, it dismantles the presentation made of the budgetary effort which must be made next year to reduce the public deficit to 5% of GDP – against the approximately 7% envisaged in the event of inaction.
Estimated at 60 billion, this breaks down into 40 billion euros in spending cuts and 20 billion euros in tax increases. But the HCFP does not achieve the same result, estimating that the effort will instead be around 42 billion euros, with 70% increases in compulsory deductions and 30% reductions in spending.
Why such a difference? In reality, the government and the body reporting to the Court of Auditors do not use the same method. The first is based on the hypothesis that expenditure would have increased by 2.8% in any case, taking into account in particular wage bill inflation, if nothing had been done.
A forecast considered very high by the organization, which places it rather around + 1.2%, but acknowledges not being able to “appreciate the relevance of this estimate”. There is also a matter of interpretation. The reduction in exemptions from employer contributions is, for example, considered by the government as a reduction in expenditure, whereas it is “ordinarily classified as an increase in revenue and compulsory contributions”.
Like a sense of deja vu
This discord around the diagnosis is reminiscent of the stormy soap opera of pension reform. At the time, the battle of numbers raged. The Pension Orientation Council (COR), which publishes a report each year based on several financial outlook scenarios for our pension system, was at the center of criticism.
A work of documentation and projection certainly welcomed, but which displays a major flaw: everyone can take on their own these different forecasts. To justify its reform, the government highlighted the fact that it would allow the retirement system to return to balance in 2030. Except that in June 2023, the COR published a new report predicting, despite the postponement to 64 years of retirement age, a deficit of 0.2% at this deadline, revised to 0.4% in June 2024. The drop in resources, and not the increase in spending, would be the cause .
Today, Pierre-Louis Bras, the former president of the COR, does not budge: “The government wanted to present this reform as a solution to the pension problem, but pension expenditure is not slipping. A reform of pensions must be considered globally in light of the situation of public finances in general. I wondered a lot about the restrictive posture he had taken.”
History seems to be repeating itself today. With a few differences. “On the subject of pensions, the COR takes very little step back, it is often very aligned with the government. There is an absence of critical thinking. With the HCFP, the work is truly independent,” says Nicolas Marques, general director from the Molinari Economic Institute.
A risky bet
By clinging to “one third two thirds”, the government is taking a serious risk. “It takes a little bit of economic culture to understand that the government is increasing the effort a little. This allows it to state without lying that two thirds of the effort will come from reducing spending, which is based on a fragile convention. There is a form of naivety in believing that we are not going to unravel it,” criticizes a member of the Court of Auditors. “The government is engaged in political communication,” analyzes a member of the High Council of Public Finances.
At Bercy, we don’t give up. “The HCFP is often harsh with the government – that’s its role – but for now I don’t think that hinders us in explaining the need to act and how we intend to get there,” indicates -one in the entourage of the Minister of the Budget, Laurent Saint-Martin. A strategy that pays off at the moment, but which could turn against the government at the end of next year. “When you present a budget, you always want to magnify the effect of the measures you have taken and minimize the negative effects, because this will give you credit in public opinion. The government is in its game” , estimates Nicolas Marques. But if its scenario, considered fragile, does not materialize, this setback would come on top of months of errors and negative adjustments to the public deficit forecasts which are currently weighing down the State accounts.
For François Bayrou, this inability to agree on a common diagnosis is a French disease. “We are incapable of discerning in any way what the future should be. Neither in the short term nor in the long term. There is a national incapacity to be interested in the long term. The Chinese are looking ahead 30 years, not always very well, but for us, it’s barely 30 days, often 30 hours. “It all constantly looks like improvisation,” points out the high commissioner for the plan. This time the government hopes to prove him wrong.
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