Bercy had prepared minds at the beginning of the month by announcing that the deficit would “significantly” exceed the government’s forecast. The INSEE ax fell this Tuesday morning. The public deficit ultimately slips to 5.5% of GDP in 2023, or 154 billion euros. A revision which in passing ranks France among the dunces of the euro zone. The debt reaches 110.6% of GDP after 111.9% at the end of 2022.
Even if this explosion was expected and announced for several days by the government, it nonetheless remains a blow to France’s economic credibility on the European scene and in front of the financial markets. The ratings agencies’ awards are expected within a month.
France had committed to Brussels to limit the increase in its deficit to 4.9% for 2023 after 4.8% in 2022, i.e. “a deterioration of 15.8 billion euros compared to the latest forecasts”. according to a publication by Thomas Cazenave on social networks. This slippage is due in particular to much lower revenue than expected last year (more than 7 billion less than government forecasts). “Revenues slow down significantly in 2023: they increase by 2.0% after 7.4% in 2022,” explains INSEE. Thus, France is deviating significantly from the budgetary trajectory that it had promised to follow. This should lead it to gradually reduce its deficit to 2.7% by 2027. From now on, Bruno Le Maire, more cautious, is content instead to swear that the executive will keep its commitment to pass “at all costs”. below 3%, by the end of the five-year term.
But last year’s ballooning deficit makes that goal even harder to achieve. For the moment, the option of tax increases is still being put aside by the executive while the level of compulsory deductions decreased last year to 43.5% of GDP after 45.2% of GDP. The solution remains to reduce expenses. In 2023, they increased by 3.7%, a slight slowdown compared to 2022 (4%). But this decline over one year is far from enough. Thus, for this year, the government has already put in place an emergency savings plan of 10 billion euros to avoid too much slippage in public accounts. A budgetary effort that will have to be “completed”, according to Emmanuel Macron’s formula. For next year, Minister for the Budget Thomas Cazenave has already announced that at least 20 billion in spending cuts would be necessary. Worse still, according to the Court of Auditors, these savings, although colossal, would not be sufficient. Indeed, she estimates, for her part, that no less than 50 billion euros would have to be cut in public spending by 2027 to achieve the budgetary target.
