how does the government plan to find an additional 10 billion euros this year?

In addition to the 10 billion euros in savings already announced in February, the executive will have to make new budget cuts and generate revenue to achieve its new deficit target for 2024, at 5.1% of GDP.

Controlling the public deficit promises to be difficult. The executive announced on Wednesday April 10 that it now anticipated a public deficit of 5.1% of gross domestic product (GDP) in 2024, above the 4.4% initially forecast. This new estimate results from the significant slippage recorded in 2023, with a deficit which reached 5.5% of GDP instead of the 4.9% initially projected.

To achieve this corrected objective, the Ministry of Economy and Finance warned that it would have to find an additional 10 billion euros this year, in addition to the 10 billion euros in savings already announced in February. Here are the executive’s savings and new revenue options.

Request an “effort” of five billion from state administrations

The Ministry of the Economy first intends to request a “additional effort” of“around five billion euros” to state administrations. To do this, Bercy points out that it has a “significant room for maneuver” of “seven to eight billion euros” of credits which were frozen as a precaution at the start of the year.

As for the first savings package of 10 billion euros, the ministry is, for example, mentioning avenues around real estate spending. In February, the Minister Delegate in charge of Public Accounts, Thomas Cazenave, had already announced aa 25% reduction in office space occupied by the State. A new contribution from state operators is also not ruled out. At the end of March, the Minister of the Economy, Bruno Le Maire, committed to “write to all state operators” of which “treasuries are doing well”citing “the National Cinema Center” or “Business France”to ask them to formulate “savings proposals”.

Limit the increase in spending by local authorities

Bercy also intends “reaffirm” with local authorities the budgetary objectives which have been set for them. The goal is not to ask them “extra effort”, assures the ministry, but to ensure that the increase in their operating expenses is 0.5 points below inflation, as provided for in the public finance programming law. The ministry points out, for 2023, a “skid” of these expenses which increased by 5.9%, due in particular to an increase in “personnel and purchasing expenses in a context of inflation” and a “dynamic investment”. With inflation forecast at 2.5% in 2024, the government is urging communities to limit the increase in spending to around 2% in 2024 and thus hope “to secure” 2.5 billion euros.

Gathered Tuesday at the Ministry of the Economy, the representatives of the regions, departments, municipalities and intercommunities, however, reaffirmed their opposition to a reduction in their resources to help the government maintain its path of reducing the deficit. Asked after the meeting about a possible cut in operating expenses, the centrist president of the Calvados departmental council, Jean-Léonce Dupont, reacted to AFP: “I honestly think it’s impossible.”

“We have already given generously”, added the socialist André Laignel, president of the Local Finance Committee. Local authorities have already seen their resources decrease in recent years, partly through the elimination of the housing tax on main residences.

“Tax the annuities” of certain companies

If the Ministry of the Economy once again assured that the budgetary efforts would not be borne by “households” And “almost all companies”, However, he hears “tax annuities” of certain companies. The Prime Minister recently entrusted a parliamentary mission on this subject to four deputies from the majority, the conclusions of which are expected in June.

Bercy wishes in particular to make greater contributions to energy companies, via an increase in the contribution on the inframarginal rent (CRI), an exceptional tax launched in 2023 on the profits of energy companies, inflated in recent years by the rise in energy prices. In 2023, only 300 million euros have been collected, “ten times less than what was planned”, recently regretted Bruno Le Maire. “We expect a return significantly higher than what we experienced last year and we will take measures to do so.”promises the ministry.

Large companies that buy back their shares are also in the government’s sights. In March 2023, Emmanuel Macron castigated the “cynicism” of certain large CAC40 groups “who make such exceptional income that they end up using this money to buy back their own shares”, artificially increasing their stock market prices. The Ministry of the Economy is considering taxing these buybacks.