The government had been preparing minds for several days: the public deficit for 2023 is higher than expected. Much higher even since it is, according to INSEE, 5.5% of GDP, while the government’s forecast was 4.9%. A slip in public accounts described as “important”, “not completely unprecedented but very very rare”, by the president of the Court of Auditors, Pierre Moscovici, this Tuesday morning on France Inter. 0.6% more than expected, that roughly means 18 billion more deficit than expected. But where have these billions gone? 20 minutes explains the three main problems.
Growth slightly overestimated
This is the small part of the 18 billion “slips”. Every year, when the government makes its budget proposal for next year, it does so based on a growth forecast. Because, of course, tax revenues are not the same on companies doing business and if French people consume as if that is not the case.
In this case, in its budget for 2023, the government of Élisabeth Borne, at the time, projected only 1% growth. In fact, growth was 0.9%. The government was therefore not fundamentally wrong, it is difficult to predict exactly what growth will be at the end of 2023 when we are in the summer of 2022. However, that necessarily means a few fewer tax revenues.
Be careful, this subject risks returning to the subject of the budget for the year 2024. The government has forecast growth of 1.4% for this year while the consensus of specialists is rather around 0.8%: a little more than a straw. This is partly why, in February, Bruno Le Maire announced 10 billion euros in savings on the current budget.
The post-Covid recovery has disappeared
It is therefore not so much on the level of growth that the government is going wrong, but on the level of its tax revenues. In 2023, France has emerged from the post-Covid period. Remember, after a largely unprecedented decline in GDP in peacetime in 2020 at the time of the first two waves of Covid-19, the economy largely rebounded in 2021 and 2022. As a result, the rebound in growth was exceptional , and tax revenue even more.
“We did not see coming a phenomenon which was anticipated but which had not happened, which is that after a while the receipts would end up declining in relation to the income,” commented Pierre Moscovici. As we had very good results in 2021 and 2022, we said to ourselves it was going to continue into 2023. (…) We came back to reality. »
The reality is a virtual stagnation in tax revenues in 2023 compared to 2022, according to figures published by INSEE. +0.3% compared to 2022, or 2.8 billion euros. It seems big, but it’s nothing at all for the state budget: in 2022, the state had collected 544 billion euros. That year, tax revenues exploded by 7.9% compared to 2021. This is particularly the case for VAT, which represents between 35 and 40% of state revenues: its revenues increased by 2.8% in 2023 compared to 7.6% in 2022.
Inflation which still weighs
As we have seen, this “slippage” is largely the result of lower revenues than expected. But there are also some expenses that are larger than anticipated. This is at least partly the effect of inflation. We are sure of this when it comes to certain aid which has been indexed or revalued due to the general increase in prices. According to INSEE, the cost of social benefits paid increased by 3.2%, after an increase of 1.2% the previous year.
State operating expenses also increased by 6%, without knowing what part of this increase is actually linked to the increase in the price of goods and services. Finally, 2023 was the first full year of application of the increase in the index point for civil servants. We are talking about the general revaluation of state civil servants, which took place in the summer of 2022 when this index point had been blocked for ten years. This represents an increase of 4.6% in 2023, after already an increase of 4.3% in 2022.