The Court of Auditors on Thursday urged the government to initiate a “resolute recovery” of public finances damaged by the energy crisis, squeezing an “unambitious” trajectory of debt reduction. After the tens of billions of euros spent to help households and businesses cope with the health crisis, the year 2022 was to mark the end of the expensive “whatever the cost”.
It was without counting on the war in Ukraine and the surge in energy prices which led the government to get its hands on the wallet. “The energy crisis has extended the period of massive public support for the economy and households, synonymous with a still very high public deficit and debt”, notes the Court of Auditors in its thick annual public report, submitted to President Emmanuel Macron before his presentation on Friday.
“It is therefore essential to put in place a strategy that combines resolute recovery of public finances and recovery of growth potential in the medium term”, she adds, estimating that tax revenues will be less dynamic in 2023 while public expenditure continues to grow.
Growth slowdown
If the price shield on electricity and gas, rebates at the pump or even the energy check enabled France to post the lowest inflation rate in the euro zone last year, these measures represent a net cost of nearly 43 billion euros over two years, to which are added another 50 billion in health expenditure and economic recovery, she notes.
All against a background of slowing growth. After 2.6% in 2022, the executive is counting on a gross domestic product (GDP) up 1% this year, a more optimistic forecast than those of the IMF or the Banque de France. With a public deficit at 5% of GDP and a public debt above 111%, “France’s public finance situation will thus remain among the worst in the euro zone in 2023”, far from the objectives set by the European authorities, tackle the Sages of rue Cambon.
However, the path to reduce deficit and debt by 2027, set in a public finance programming bill rejected by Parliament, is “unambitious”, they lament. By this time, the government intends to reduce the deficit below the European limit of 3% of GDP, i.e. two years or more after the other main economies of the euro zone, while the debt is expected more or less at the same level ( 110.9%).