This is no longer skidding but downright aquaplaning. France’s public deficit reached 5.5% of GDP in 2023, at 154.0 billion euros, INSEE revealed on Tuesday. This is much more than the 4.8% deficit achieved in 2022 and the 4.9% initially planned by the government for 2023.
This worsening is explained in particular by revenues which “slow down significantly in 2023”, up 2.0% against +7.4% in 2022, explains the National Institute of Statistics and Economic Studies in a press release. They were “penalized by the slowdown in the economy, new measures on compulsory deductions, and a decline in transfers received”, specifies the institution, referring to taxes “almost at a standstill”, increasing “only by 0 .3% (+2.8 billion euros) after +7.9% in 2022.” VAT revenue, in particular, “slowed down significantly to +2.8% after +7.6%”.
Public spending in decline, as a proportion of GDP
Expenditures have also slowed down “a little”: “they increase by 3.7% after +4.0% in 2022”, indicates INSEE. “As a proportion of GDP, spending continues to decline and stands at 57.3% of GDP after 58.8% in 2022”, he specifies, but they remain “significantly higher than before Covid-19 (55.2% of GDP in 2019).”
Operating expenses (+6.0%) and social benefits “accelerate” (+3.3%, after +1.2% in 2022), driven “by the revaluation of benefits indexed to inflation”, indicates the institution. “Remuneration paid is also accelerating: +4.6% after +4.4%, with the full-year effect of the July 2022 index revaluation, the July 2023 revaluation, and more dynamic public employment than in previous years », It is specified.
Debt falling
The INSEE figure on the deficit was particularly awaited because every decimal place counts for public finances. “To put it simply, each 0.1 point” of GDP of additional deficit in 2023 “represents around 3 billion” of euros missing from state coffers, economist Mathieu Plane explained to AFP.
The government had warned at the beginning of March that the deficit would be “significantly” higher than the 4.9% initially forecast and speculation had been rife for a week on the exact figure, notably since the press’s mention of a deficit at 5.6% of GDP.
The French public debt reaches 110.6% of GDP at the end of 2023, said the National Institute of Statistics and Economic Studies. This is less than in 2022, when it stood at 111.9%, but almost a percentage point above the government’s forecast (109.7%).