2023-09-14 21:24:09
Paris, France August 23, 2023 – Exit of the Council of Ministers at the Élysée Palace. Here the Minister of Economy, Finance and Industrial and Digital Sovereignty, Bruno Le Maire. JULIEN MUGUET FOR “THE WORLD”
The recession in Germany, the slowdown in China and the rise in interest rates ultimately forced Bercy to revise its growth forecasts downward for 2024. The ministry slightly corrected the macroeconomic scenario which underlies its draft budget for next year, which must be presented on September 27 to the Council of Ministers. Growth is now expected at 1.4%, compared to 1.6% before the summer.
The Minister of the Economy Bruno Le Maire nevertheless sees the “ persistence of a positive trend ” in a “ degraded European and international environment “. The forecast for 2023 remains set at 1% “while some predicted a recession in 2023”, he quipped Thursday, September 14, during an exchange with the press. For its part, INSEE expects a slightly lower performance, at 0.9%.
The other data on which the budget is based have not been corrected since they were sent to Brussels in April: inflation is expected at 2.6% next year (after 4.9% this year) , the public deficit at 4.4% of GDP (compared to 4.9% this year), while the weight of debt in GDP, at 109% in 2023, would not decline before 2026. The rise in rates continues to bleed public finances: the debt burden will rise by nearly 10 billion euros next year, to reach 48 billion euros (i.e. more than the national education budget), and will exceed 74 billion euros euros in 2027. These forecasts must be sent to the High Council of Public Finances, responsible for evaluating their sincerity in an opinion next week.
Deceleration of inflation
If it will relieve households, the expected deceleration of inflation does not suit Bercy’s business. After boosting tax revenues over the last two years, “ it will come to burden expenses through indexation, which acts with delay,” recalls public finance specialist François Ecalle. This mechanism consisting of increasing certain expenses at the rate of inflation will cost nearly 25 billion euros in 2024: the income tax scale will in fact be modified to take into account changes in prices, while that 450 billion euros of social benefits will be increased by almost 5% at the start of the year.
“We continue to massively protect the French against inflation », insisted Bruno Le Maire on Thursday. The “price shields” put in place to absorb the explosion in gas and electricity prices must gradually disappear by the end of 2024, and Bercy has ruled out making a new move in the face of the increase in fuel prices, demanded by the oppositions.
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