France sets up a “scientific committee” to avoid a new budgetary accident

POLITICS – The Covid-19 crisis had its Scientific Council, that of the deficit will also have its own cell. A committee of nine economic experts was installed this Thursday, November 14 by the government in order to improve macroeconomic forecast models and the management of public finances, after an unforeseen slippage in the French public deficit in 2024, for the second consecutive year.

For temporary purposes, this “scientific committee” will formulate recommendations with a view to the presentation, around mid-December, of an action plan by the Ministers of the Economy, Antoine Armand, and of the Budget, Laurent Saint-Martin, their offices indicated.

“Two main axes” will be addressed, according to Antoine Armand's office: “how to improve the quality of macroeconomic forecasts in a fairly evolving economic context (…); and how to improve the monitoring of budgetary developments and the transparency of this monitoring during the year”particularly with Parliament.

Initially forecast at 4.4% of GDP, the public deficit should ultimately reach 6.1% in 2024, due in particular to much lower revenue than anticipated, when the growth forecast was lowered from 1.4% to 1. 1%. The deficit had already slipped from 4.9% to 5.5% in 2023 for the same reason.

These discrepancies, detrimental to France's credibility in the eurozone, of which it is one of the worst performers, have raised questions about the reliability of government forecasts. To the point of making Pierre Moscovici, first president of the Court of Auditors and president of the High Council of Public Finances (HCFP), say that “our revenue forecasting machine is partly broken”. The latter had suggested at the beginning of November to entrust the forecasts to “an independent institution” like HCFP.

The Mayor on the parliamentary grill

In Parliament, two initiatives were launched to understand the reasons for the fiasco. The first in the Senate, in the form of an information mission on the public slippage and the second in the Assembly with the launch on December 5 of a commission of inquiry, led by the Finance Commission. The former Minister of the Economy Bruno Le Maire is in particular demand and will be heard on December 12 by the deputies. Already heard by the Senate at the beginning of November, he refused any mea culpa, evoking “ a serious technical error in the evaluation of revenue.

The “scientific committee” is made up of experts “totally independent”according to Bercy: Jean-Luc Tavernier (director general of INSEE), François Ecalle (president of the specialized site Fipeco), Olivier Garnier (director in charge of statistics, economic studies and international relations at the Banque de France), Xavier Ragot (president of the OFCE), Ludovic Subran (chief economist of the Allianz group), Camille Landais (delegate president of the CAE and professor of economics at the LSE), Valérie Plagnol (president of the Cercle des epargnants and commissioner at the CRE ), Laurent Bach (professor of finance at Essec and member of the IPP) and Xavier Jaravel (professor of economics at LSE).

If there can be “points for improvement” on certain processes, “in no case are (the ministers) calling into question the technical quality of the Bercy teams”assured the Ministry of the Economy.

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