2023-06-29 12:44:08
The summer will be studious at Bercy: with 10 to 15 billion euros in savings to be found for the next finance bill for 2024 which will be presented in the fall, the government will have to make painful choices to start the recovery of public accounts.
But this effort is only a taste of what awaits it for the rest of the five-year term: it will thus have to generate 60 billion in savings in total by 2027 to meet its budgetary objectives. And yet, this will not necessarily be enough to bring the public deficit below the 3% of GDP mark by this horizon, a level which would in any case put France in the wake of its European partners. This is what emerges from the annual report on the situation and outlook for public finances that the Court of Auditors publishes on Thursday.
Last of the class in Europe
“Reducing the deficit to less than 3% of GDP in 2027 is an achievable objective at the cost of an unprecedented effort on public spending”, alert the financial magistrates, who note that “this objective must be achieved under conditions as much more difficult than new expenditures are committed and that it will be necessary to guarantee the financing of ecological investments”.
To arrive at this analysis, the Court of Auditors immersed itself in the stability program (PSTAB) that the government sent to Brussels last April, a sort of budgetary roadmap between now and 2026. The entire euro zone bends to this exercise, which allows comparisons to be made. Among the eight major countries, “France would be the only country not to have a deficit below 3% in 2026 even though Italy or Spain start from higher deficit levels in 2022”, it is underlined. in the report.
Even more worrying, if the government paraded in the spring by explaining that this PSTAB sanctioned the acceleration of the country’s debt reduction – with the objective of reducing the debt to 108.3% of GDP in 2027 – this must be put into perspective: the France would remain by 2026 around 12 points above its level before the Covid crisis, i.e. the widest gap of the eight main countries in the euro zone. The comparison is also cruel with Portugal: it was more indebted than France in 2019 (116.6% against 97.4%) but aims for the threshold of 95.6% in 2026, i.e. a lower level of 15 points. of GDP to that of France.
Distant goals
If the Court of Auditors visibly regrets the lack of ambition of the government’s strategy, it also judges that the stated objectives will be difficult to achieve. Two pitfalls are pointed out. First, the government’s growth forecasts by the end of the five-year term, deemed “optimistic” by the budgetary wise with “an average growth forecast for 2024-2027 higher by 0.3 points than that of the consensus of economists”.
To this is added above all the construction site of public expenditure to which Bercy promises “unprecedented control” according to the Court. If we exclude the interest charge – promised to rise sharply – and stimulus or support measures, we would need a volume increase (excluding inflation) of 0.4% per year between 2023 and 2027. This has could have happened in the past – in 2015 or 2018 – but “it would be unprecedented for such moderation to be imposed four years in a row”.
Economies massives
The Court compares this objective with what happened in the previous decade before the health crisis, between 2010 and 2019, a period during which public spending had increased by 1.2%. “Reducing the expenditure growth rate from 1.2% to 0.4% means that 12 billion in savings must be found each year, i.e., cumulatively by 2027, nearly 60 billion euros” , is it written in the report. It is an imposing effort, so much so that a “new discretionary reduction in compulsory levies does not seem judicious”. Emmanuel Macron, who said he wanted to lower taxes by 2 billion euros for the middle classes, will appreciate.
In any case, these two mountains that stand before the government’s ambitions could radically change the budgetary landscape by 2027. The Court of Auditors has calculated the impact of weaker growth than expected (1.4% per year between 2024 and 2027 as the economists predict, and not the +1.7% of Bercy) and a control of the expenditure half less than what is anticipated: this “would lead to a debt of 116.1 points of GDP in 2027, i.e. nearly 8 points above the government’s scenario.
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