After two years of spectacular slippage in public accounts, forecast errors and perhaps a dose of deception, is the budget for 2025 prepared in two weeks by Michel Barnier credible this time? Sincere ? The first to examine the government’s copy, the High Council of Public Finances issued a mixed opinion on Thursday, October 10.
According to this body, which depends on the Court of Auditors, the objectives displayed by the new Prime Minister do not seem unreasonable or incoherent, as those of previous governments may have been. However, many hypotheses remain “optimistic”, and the overall deficit forecast is judged « fragile ». Clearly, reducing this public deficit to 5% of gross domestic product (GDP) in one year, as the executive aims, promises to be very complicated, without seeming entirely impossible. “There is more reason than in past years, no caution yet,” summarizes Pierre Moscovici, the president of the High Council of Public Finances and the Court of Auditors.
Building your budget on favorable forecasts in order to alleviate initial constraints is a great classic. But this can lead to the worst, as for the 2024 budget. During its presentation by Bruno Le Maire, then Minister of the Economy, in September 2023, the deficit of the State, communities and Social Security should thus be reduced to 4.4% of GDP. In reality, the initial rather unrealistic assumptions, particularly regarding tax revenues and public spending, did not materialize. Result: the deficit rose to 6.1% at the end of December, according to the latest forecasts. A gigantic gap, of the order of 52 billion euros. With the threat of additional unpleasant surprises between now and the end of the year.
The assessment of growth “a little high”
So the deficit forecast for 2024 remains “affected by a non-negligible uncertainty”, slips the High Council into its opinion, regretting that, since the red alert this summer, the executive has not launched “more effective braking measures”. Due to lack of a majority in the National Assembly, Michel Barnier has, in particular, given up on proposing an amending finance law for 2024, which would have made it possible to immediately raise certain taxes or cancel certain expenses.
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For 2025, the macroeconomic scenario retained by the government “is generally fragile”, because it is once again based on numerous optimistic hypotheses, notes the High Council. Inflation? Expected to be 1.8% in 2025, it “seems a little high considering the extent of the disinflation movement observed since the start of this year”.
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