We explain to you why the public deficit of more than 5% of GDP worries the executive so much


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Emmanuel Macron and Bruno le Maire, the Minister of Finance, during a meeting at the Elysée, July 21, 2023. (CHRISTOPHE ENA / AFP)

While the official figure for the public deficit will be known in a few days, the government fears having to pay more interest on the French debt and seeing its credibility undermined internationally. He also fears political consequences.

The accounts are not good. France’s public deficit for the year 2023, initially forecast at 4.9% of GDP, promises to be larger than expected. According to Jean-François Husson, the budget rapporteur for the Senate, Bercy’s services envisage a slippage in the public deficit to 5.6% of GDP in 2023, then 5.7% in 2024 and 5.9% in 2025. Thomas Cazenave , the Minister for Public Accounts, has already made it known on franceinfo that France’s public deficit in 2023 should be “greater than 5%”. The official figure will be made public on Tuesday March 26 by INSEE. In anticipation, the government is already preparing minds for possible budget cuts. We explain to you why a public deficit above 5% worries the executive so much.

Because France’s rating will soon be re-evaluated

This probable surge in the French deficit risks first of all tainting the credibility of the government, which had committed to reducing the deficit to 4.4% in 2024 and below the European objective of 3% of GDP by 2027 France is indeed one of the bad students of the European Union. “The situation of France’s public finances will remain in 2024, as in 2023, among the most degraded in the euro zone”already warned the Court of Auditors in its report delivered in mid-March.

And this loss of credibility for France in its ability to keep its public accounts comes at a very bad time as the rating agencies deliver their verdict in a month on France’s ability to repay its debt. The Fitch and Moody’s agencies will reassess France’s rating on April 26. The Standard & Poor’s agency, the most feared, will make its decision on May 31. In December 2023, Standard & Poor’s granted an AA to France, while highlighting a “uncertainty (…) in a context of high budget deficit”.

A downgrade in France’s rating could increase the cost of its borrowing and put a further strain on public finances. The government already anticipates that the interest on the French debt will be doubled by the end of Emmanuel Macron’s five-year term. France thus spent 38.6 billion euros in 2023 to repay the interest on its debt. According to the government, this sum should reach 74 billion in 2027.

Because the government must find budget cuts

Despite the deterioration of public accounts, the government wants to keep its promise not to increase taxes. To do this, he hoped to be able to count on favorable growth of 1.4% in 2024, but Bruno le Maire finally had to revise this growth to 1% in February. The Minister of Finance immediately announced a savings plan of 10 billion euros in state spending. Ecology, employment and higher education are the positions hardest hit by the measures announced.

At the beginning of March, the Minister for Public Accounts, Thomas Cazenave, in turn announced 20 billion additional savings in 2025. The government this time intends to cut back on the Social Security and State budgets. On Wednesday March 20, Emmanuel Macron received Ministers Bruno Le Maire (Finance), Catherine Vautrin (Health) and Christophe Béchu (Territorial Cohesion) in order to identify avenues for curbing unemployment insurance and health spending.

Because the oppositions take advantage of it to criticize

Less than eighty days before the first round of the European elections, the oppositions did not hesitate to rush into the breach to criticize the management of Emmanuel Macron and his government. France is taking the same path as Greece in terms of deficit audience. This disastrous management of public finances must be censoredtackles Eric Ciotti, the president of the Republicans, in The echoes. Marine Le Pen deplores “pathetic results” and castigates “the incompetence of this government in the financial field”.

On the left, the criticisms are not more tender. “Either there was a lie in the construction of the budget, or there is incompetence”estimates socialist MP Valérie Rabault on franceinfo. “A deficit of 5.6% of GDP for 2023 compared to 4.9 envisaged, it’s dizzying”, she emphasizes. And calculate: “When we have 0.7 points of GDP deficit more, we are around 18 billion more.”

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