Red alert on public accounts: the unexpected surge in local authority spending, coupled with disappointing tax revenues, could push the public deficit to 5.6% of GDP this year, or even 6.2% in 2025, according to budget documents sent Monday by Bercy to parliamentarians and consulted by AFP.
In a letter addressed Monday evening to the general rapporteurs and the chairmen of the Finance Committees of the two assemblies, the resigning Minister of Finance Bruno Le Maire and the resigning Minister Delegate for Public Accounts Thomas Cazenave expressed concern about the “extremely rapid increase in local authority spending”.
This additional spending could “worsen the 2024 accounts by 16 billion euros compared” to the deficit trajectory sent to Brussels in the spring.
Already lowered by “nearly 30 billion euros” in the spring, the tax revenue forecasts could also not be achieved given growth “less favorable to tax revenue”, the two ministers fear.
According to the chairman of the Finance Committee of the National Assembly, Eric Coquerel, recipient of the documents sent by Bercy, the public deficit (which aggregates the accounts of the State, local authorities and Social Security) could reach 5.6% of GDP this year instead of the 5.1% hoped for.
It would widen to 6.2% of GDP in 2025 – instead of 4.1% anticipated by the outgoing executive – if 60 billion in savings were not made.
On LCI, right-wing MP Olivier Marleix considered that there was “an urgent need to redress the situation”.
The Confederation of Small and Medium-Sized Enterprises (CPME) also considered in a press release that it was “more than urgent to reduce public spending”.
Eric Coquerel prefers to bet on increasing revenues, via the taxation of “the capital income of the richest” and the increase in salaries, “so that there are more contributions coming in” to the State and Social Security coffers.
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But for the CPME, “the easy solution of increasing compulsory levies even further would only accelerate the catastrophe by discouraging those who keep the economy of our country running, already the European champion of compulsory levies.”
Targeted since the end of July by a European procedure for excessive deficit, France, like six other EU countries, must send its public accounts recovery plan to Brussels before September 20 until 2027, the date by which it should normally have returned to below 3% of GDP for the public deficit.
– “Very negative signal” –
To give itself a chance of achieving this, the outgoing government has prepared a “reversible” 2025 budget for its successor, which provides for State expenditure strictly equivalent to that of 2024 (492 billion euros), but distributed differently between ministries.
The distribution of credits by ministry, which may be revised by the next executive but within very tight deadlines, was communicated to parliamentarians on Monday evening.
According to “an initial analysis” by Mr. Coquerel, “only the budgets dedicated to defense and security will increase faster than inflation” (expected at 1.7%) next year, he indicated in a press release.
Conversely, “the policies most affected should be public development aid (-18% without taking inflation into account), sport (-11%), agriculture (-6%), overseas (-4%), ecology (-1%) and health (-0.8%)”.
In a press release, the deputies of the Ecologist and Social Group (GES) regretted on Tuesday that the government was planning “once again severe cuts in ecological transition spending.”
“With 2024 shaping up to be a year of record heat, these austerity budget cuts are unacceptable,” thunders the left-wing group.
In a separate press release, Oxfam France expressed its outrage at the planned reduction in public development aid, which is “dramatic in view of the humanitarian needs of the poorest populations”.
Oxfam’s advocacy officer, Alan Anic asks: “When will international solidarity stop being Bercy’s budget-cutting reserve?”
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