France’s public deficit reaches 5.5% of GDP in 2023 according to INSEE, more than the 4.9% initially planned by the government

The government had warned that the public finance deficit would be “significantly” higher than expected, in particular because of the “international context”. Bruno Le Maire points to “tax revenues much lower than expected”

The government’s fears turned out to be well-founded. France’s public deficit reached 5.5% of gross domestic product (GDP) for the year 2023, according to figures published by INSEE on Tuesday March 26. The increase in public revenue slows “clearly” And “the rate of compulsory deductions decreases”details the institution, which notes however that the increase in expenditure is slowing down “A little”. Public debt, for its part, reached 110.6% of GDP.

The gap between spending and national wealth production was initially forecast at 4.9%, but this forecast had been revised upwards in recent weeks. The Minister of Economy and Finance Bruno Le Maire had warned of a figure “significantly” higher.

The Minister Delegate in charge of Public Accounts, Thomas Cazenave, explained on franceinfo this slippage expected by the “international context”with “the Chinese slowdown, the war in Ukraine” or “the slowdown of our European partners”, notably Germany. Slow growth which motivated the government to cut planned public spending, with a savings plan of 10 billion euros announced by Bruno Le Maire in February.

Objective of 3% of the deficit in 2027 maintained

However, the government maintains its objectives for the coming years. “My determination to restore public finances and get the public deficit back below 3% in 2027 is intact”, assures Bruno Le Maire on RTL on Monday. He explains this deterioration not by an increase in public spending but by “tax revenues much lower than expected”especially because “inflation is falling faster” than expected, which reduces, for example, tax revenues from VAT or payroll.

If this deficit figure is particularly scrutinized, it is because every decimal place counts for public finances. “To put it simply, every 0.1 point” of additional deficit GDP in 2023 “represents around 3 billion” euros missing from state coffers, economist Mathieu Plane told AFP.

The government’s concern can also be explained by other factors. The French debt rating must be reassessed in the coming months by the main rating agencies, while the country is among the most indebted in the euro zone. The oppositions also take the opportunity to criticize the management of Emmanuel Macron and his government.