In its opinion on the amending finance bill for 2022, the High Council of Public Finance reviews the figures put forward and underlines the risks that obscure the horizon.
Top start for a particularly awaited political sequence. This Thursday, a few hours before the presentation of the key texts on purchasing power in the Council of Ministers, the High Council of Public Finances (HCFP) published its opinion on the amending budget for 2022. This amending finance bill ( PLFR) is one of two blocks containing measures to protect household portfolios.
The High Council begins with a point of method, being annoyed by the too short time allowed to it to study the text: seized on June 29, it was to render its conclusions two days later, a period deemed too short. “Not justified by urgency“, this accelerated tempo “makes it particularly difficult for the HCFP to exercise the mandate entrusted to it by organic law“, pings the board.
Overall, the High Council formulates several caveats to the government’s forecasts contained in the PLFR 2022. The executive expects growth of 2.5% over the year, admittedly revised downwards compared to the end forecast 2021 – 4% – but which remains optimistic: the OECD, Insee, the Banque de France and other experts still prefer to speak of growth between 2.1% and 2.4% for the most optimistic.
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The executive’s forecast, which is based on resistance in activity, employment and a rebound in consumption thanks to measures for purchasing power, is thus “weakened by several factors“. First, household confidence remainsat a level close to its lows reached in 2018 and 2020»: savings could therefore be favoured. Then, companies could be forced to limit their investments, faced with a difficult economic situation. Finally, the French trade balance should suffer from inflation and “energy supply difficulties in Europe“. The growth forecast is therefore not “not out of reach, but is a bit high», Estimates the HCFP.
The inflation estimate presented by the executive for 2022 – 5% – is also “a little underrated“, according to the report, which underlines that it is lower than the forecasts of the experts. INSEE, for example, calculated the annual rate at 5.5% in its last note a few weeks ago. Finally, the government is advancing an 8.5% increase in payroll in the non-agricultural market sector and 40,000 net job creations by the end of the year. These two figures differ from the consensus of experts, underlines the HCFP: the first is “stronger» and the second «weaker».
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New alert on public finances
Like the Court of Auditors, the High Council is once again sounding the alarm on the State portfolio, while significant expenditure is planned for the coming months and the context remains uncertain. In its amending budget, the executive advances revenue up by 67.2 billion euros in 2022 compared to 2021, and expenditure which will soar by 60 billion euros, including 35 billion measures for the power of purchase. However, these two figures are questioned.
First of all, the receipts part, optimistic, assumes that the rebound in activity will allow the State to pocket taxes and duties, in particular on companies, energy products and VAT, which are greater than habit. But this finding could be called into question by a drop in fuel consumption in the face of the explosion in prices at the pump, or a deterioration in the economic situation. At the same time, the expenditure partis surrounded by unusual uncertaintyand runs the risk of being underestimated. Inflation, the rise in interest rates, the new waves of Covid-19 and the jump in energy prices will weigh on the balance sheet, weighing down the public accounts in a way that is difficult to estimate, both the situation remains unpredictable.
Under these conditions, the government’s forecasts for the debt and the deficit also seem optimistic. If the executive plans that the second will be reduced to 5% of GDP in 2022 and the first to 111.9%, these figures are “affected by essentially unfavorable risks“. Once again, the High Council therefore calls on the authorities to “the utmost vigilance” : of the “one-off measures” can be taken in the face of the exceptional context, but they must be accompanied by “expenditure control measures coupled with the search for greater efficiency“, under penalty of seeing the public accounts plunge into the red.
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