For the government, this blow hurts. On the eve of the presentation of the 2023 draft budget, the High Council of Public Finances (HCFP) considers the State’s objectives to reduce the public deficit by 2027 “unambitious”.
The trajectory by which the government intends to reduce this deficit from 5% of GDP to 2.9% over the duration of the five-year term is also considered “particularly fragile” by the HCFP, which considers its assumptions “on economic growth, on the control of public expenditure and on the increase in compulsory levies”.
Reforms with “overestimated” impact
According to the High Council, an independent body attached to the Court of Auditors, the government has “overestimated” the impact of all the reforms it plans to implement, namely pensions, unemployment insurance , active solidarity income (RSA) and apprenticeship, “particularly in the first years of programming”.
He specifies that for all these reforms, “neither the methods, nor the impacts, nor the timetable are documented”. For pensions in particular, “the resulting savings would in any case be limited to the horizon of the programming period”.
The pension reform is not contained in the social security financing bill. The reform could be initiated by way of amendment during the parliamentary debate, or by a dedicated text, said Sunday the Minister for Relations with Parliament, Franck Riester.
This text provides for a sharp decline in Social Security deficit next year, to 6.8 billion euros, against 17.8 billion in 2022.
According to the High Council, the public finance programming bill for the five-year term, which the government is due to present on Monday at the same time as its budget for the year 2023, “does not include a rapid return to the objective of balance in public finances, to which France is committed” at European level.
France’s debt higher than GDP
France is now one of the seven countries in the euro zone whose public debt is higher than gross domestic product, while it is less than 80% of GDP for eleven of them, notes the HCFP.
In its separate opinion for 2023 alone, the HCFP considers the government’s 1% growth forecast “a little high”. Public spending should fall by 1.1% once inflation is deducted, but “the deficit could ultimately be larger than expected due to the underestimation of certain expenditures”.
Finally, the public deficit forecast of 5% of GDP next year “is marked by the great uncertainty surrounding macroeconomic developments, in particular energy prices”.