The government shows its ambition: less public spending to preserve the financial “credibility” of France. On Thursday April 20, Bruno Le Maire presented a new public finance roadmap for the coming years. A trajectory that should make it possible to accelerate debt reduction and reduce the deficit by 2027, at the end of the five-year term. For the first time since the start of the health crisis linked to Covid-19 and the massive support expenditure of “whatever the cost”, France plans to return partly to the European nails in 2027, the last year of the second term of President Emmanuel Macron.
“We want to accelerate France’s deleveraging,” said Economy and Finance Minister Bruno Le Maire. “France’s European credibility is at stake,” he warned the press, as two international rating agencies are due to publish their opinion on the country’s finances by the end of April.
The public deficit is expected to fall firmly below the 3% of gross domestic product (GDP) threshold set by EU fiscal rules: 2.7% in 2027, compared to a forecast of 2.9% so far. After reaching 4.7% in 2022, it should rise slightly this year (4.9%) before gradually declining from 2024. Deleveraging should also experience a boost, with debt representing 108.3% of GDP in 2027, i.e. 4 points less than previously envisaged. The debt was at 111.6% of GDP at the end of 2022. The French forecast for 2027, however, remains very far from the European objective of 60%.
These prospects are contained in the stability program (PSTAB) which will be presented to the Council of Ministers next week and which is sent each year by the EU Member States to the European Commission. No more exceptional checks and other aid worth tens of billions: as a pledge of budgetary seriousness, the government affirms its desire to initiate a “cooling” of public spending, which should progress more slowly than inflation. . “We have just asked our compatriots to make an effort with the pension reform […]. It is right that public actors […] are also involved, ”said the Minister.
As for inflation, which the European Central Bank is trying to counter with interest rate hikes, it should start to slow from mid-2023, despite a forecast raised to 4.9% (compared to 4.2% previously). ) for this year. It had reached 5.2% in 2022. At the beginning of March, the Court of Auditors was very critical of the government’s slowness to redress the public finances of the country, which is among the worst European students.
“We absolutely have to reduce this debt load […]. The choice is clear: either debt reduction now or taxes tomorrow,” said Bruno Le Maire, categorically ruling out the latter scenario. This cost of debt – one of the main items of the state budget – has soared due to a much heavier debt since the health crisis and a sharp rise in interest rates. The bill will further increase by 10 billion euros by 2027, anticipates the government.
The need for a more resolute recovery is all the more accentuated since after its suspension during the Covid, the EU stability pact setting the budgetary objectives will soon be reactivated. “In some sectors, we spend too much,” said the Minister in charge of Public Accounts, Gabriel Attal, citing in particular housing. In 2027, public spending will increase to 53.5% of GDP against 57.5% currently.
A spending review is underway with the ambition of generating billions in savings. At the same time, Prime Minister Élisabeth Borne asked the ministries “to identify 5% of room for maneuver in their budget to finance the ecological transition”, according to Bruno Le Maire. Another source of savings, up to 30 billion euros by 2025, the decline in energy prices and the end of the tariff shield. At the same time, the government is counting on progressively more dynamic growth, up to 1.8% in 2027 (compared to 1% this year) and full employment with unemployment at 5%.