A 3% deficit? yes… but not before 2027
The rule in the European Union is simple: member countries must ensure that they do not have a public deficit of more than 3% per year. With, of course, an ideal: a zero deficit, things rarely achieved. And regularly, the member countries send to Brussels, and therefore to the European Commission, their budgetary plans. France has thus sent its 2023-2027 stability programme.
It provides many savings on the budget. With one objective: to fall back below the 3% deficit. To do this, cuts are planned, and some have already been announced. Thus, according to Bercy, France could be able to reach a deficit of 2.7% by 2027. In 2022, the public deficit stood at ) 4.7% of GDP, or 124.9 billion euros. Public debt rose to a record level of 111.6% of GDP.
For the Court of Auditors, France is not doing enough
The reduction in the deficit is notable, and the stability program would allow France to return to the nails of European rules. Good news… which is not enough for the Court of Auditors. The latter, on June 29, 2023, pinpoints the stability program as weak, when compared to other savings projects in European countries.
In this case, it is the year 2026 that poses a problem for the Court of Auditors. France, according to the stability programme, should still have a public deficit of more than 3%. “ France would be the only one not to have a deficit below 3% in 2026even though some countries such as Italy and Spain are starting from higher deficit levels in 2022 (respectively 8 points of GDP and 4.8 against 4.7 for France) write the Sages.
A way of saying that the government can do better. If the other European countries that start further away manage to have a deficit of less than 3% in 2026, there is no reason why France cannot do the same.
Deficit reduction targets that will not be met?
Another issue raised by the Court of Audit : the stability program is more than uncertain. The announced decline would be 0.4% per year, on average. But to do this, the growth forecasts on which the stability program is based must be confirmed. But nothing is less certain. For the Court of Auditors, the executive’s forecasts would even be rather optimistic.
Already in 2023, the government’s growth forecast is optimistic. He still expects 1% GDP growth over the year, where the Banque de France and INSEE are more moderate. The two institutions forecast growth of around 0.6%.