Unheard of for 20 years: in order to keep its commitment to reduce the deficit below 3% in 2027, the government intends to clearly contain public spending during the five-year term, and this, despite an “uncertain” economic context in the short term.
“We reaffirm France’s budgetary seriousness”, with “a recovery of the public accounts which is one of the priorities of our majority”, defended the Minister of the Economy Bruno Le Maire by presenting to the press the economic and financial prospects of France during the quinquennium.
Stability program
He notably confirmed the ambition displayed by Emmanuel Macron of a “reduction of the public debt from 2025” and to return “below the 3% deficit in 2027”, against 5% expected in 2022.
These forecasts are contained in the stability program (pstab) that the executive transmits each year to the European Commission, usually in the spring, but with a few months delay this year. The executive thus plans to significantly reduce the rate of increase in public expenditure in volume to 0.6% per year on average over the duration of the five-year term.
State-focused effort
An ambitious objective, as recognized by Bruno Le Maire who notes that it would be “the lowest rate of increase for twenty years”, since according to figures from Bercy the increase in public spending has reached 2% per year over the last twenty years. years and 1.2% per year over the last ten. Especially since public money has been flowing for two years to deal with the health crisis and now the consequences of the war in Ukraine, in particular inflation.
To achieve its objective, the government wants to concentrate the effort on the State, with a 0.4% drop in expenditure over the five-year period on average per year, and on local authorities which will have to reduce their operating expenditure by 0, 5% over the period. Conversely, in order to finance the promises of the President of the Republic in favor of hospitals and health, social spending will increase by 0.6% over the five-year period on average per year.
“All in all, this pstab presents clear political choices: controlling public spending (and) refusing an austerity policy, since we are not drastically lowering public spending,” defends Bruno Le Maire.
1.4% growth in 2023
The new reality in the National Assembly, with a relative majority for the presidential camp, could however make it difficult to achieve these objectives, in particular the effort required of local authorities, at a time when the deputies are already trying to compensate the State the increase in the remuneration of civil servants.
“Everyone will have to face up to their responsibilities”, we answer at Bercy, where we are ironic about those who claim to want to reduce deficits simply by fighting against social or tax fraud. “It seems to us that in view of the expectations of the population, it is the State and the local authorities which must contribute” to this effort to restore public accounts, we argue at Bercy.
Last February, the Court of Auditors judged that the desire to reduce the deficit below 3% in 2027 was “uncertain”, but at Bercy we continue to defend a “realistic and proactive” scenario and promises to detail the avenues for savings. in the fall in the public finance programming law.
An expected slowdown
In addition to this effort on spending and much smaller tax cuts than the more than 50 billion of the previous five-year term, the executive is also counting on the reforms to come (pensions, unemployment insurance, vocational training) and on the plan of investment France 2030 to stimulate the economy and achieve “full employment”, i.e. 5% unemployment in 2027. “One of the guiding principles of the pstab is the valuation of work, the common denominator of all the reforms”, insists Mr. The mayor.
But in the short term, the government still expects a slowdown in the economy next year, with growth forecast at 1.4%, after 2.5% in 2022, inflation still high at 3, 3% and a public deficit that would stagnate at 5% of GDP, due to the “uncertain” context, linked in particular to the war in Ukraine and the situation in the United States and China.
Growth should then accelerate to 1.6% in 2024, then 1.7% in 2025 and 2026, and finally 1.8% in 2027.