France is in the red. And the situation could get even worse. More dynamic than expected, local authority spending, coupled with lower than expected revenue for the State, could indeed push the public deficit to 5.6% of GDP this year, or even 6.2% in 2025.
In a letter addressed Monday evening to the general rapporteurs and the chairs 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 increase in spending could “worsen the 2024 accounts by 16 billion euros compared to” the deficit trajectory sent to Brussels in the spring. And yet, already lowered by “nearly 30 billion euros”, the tax revenue forecasts could also not be achieved.
A little better on expected growth
Regarding macroeconomic forecasts, the government is now counting on growth of 1.1% in 2024, compared to 1% previously anticipated, due to a “higher than anticipated growth carryover in mid-2024 and a forecast of growth acceleration in the 3rd quarter”. “It is up to the next government to modify the elements prepared, if necessary, in terms of both revenue and expenditure”, they write. The outgoing government is in fact preparing for its successor a “reversible” 2025 budget based on state expenditure strictly equivalent to that of 2024, 492 billion euros, but distributed differently.
The chairman of the Finance Committee of the Assembly, Éric Coquerel (LFI) indicated on Monday evening that, among the documents received from Bercy, “a summary table of the budgets planned at this stage for each ministry” shows that “only the budgets dedicated to defense and security will increase faster than inflation” next year.
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%)”. Labor (+1%) and national education (+0.5%) “will also be affected by a reduction in resources”, since the increase in planned credits is lower than a foreseeable inflation of around 2% next year.
