Public deficit: even before censorship, France has already left the euro zone

A reprieve before the fall. The fate of Prime Minister Michel Barnier now seems sealed. While the National Assembly was to vote this Monday afternoon on the Social Security budget, the government activated 49.3 to pass in force. And immediately trigger the tabling of a motion of censure from the left. After days of pressure, the National Rally announced that it would vote to censure the government in unison with the left, having not obtained the concessions it wanted. The fall of the government therefore seems to be only a matter of hours. However, in this unprecedented political storm, the Standard & Poor's agency decided, Friday, November 29, to maintain its confidence in France.

“Despite the political uncertainty”, she euphemized, the French debt rating remains under “stable outlook”. Likewise, the European Commission validated the financial trajectory planned by the executive, without having too many illusions either. Neither S&P nor Brussels really believe in respecting the deficit objective, supposed to fall from 6.1% of GDP to 5% in 2025. The recovery plan of 60 billion euros melts with the political concessions (smaller reduction reductions in charges, taxes on electricity, etc.). Reaching 5.3%, as the Commission plans, would already be an achievement. One thing is certain, France would remain the European dunce, as shown by the recent drop in the French deficit compared to that of the Euro zone as a whole.

In twenty years, France's deficit has only been lower than the famous limit of 3% of GDP, inherited from the Maastricht Treaty, three times. But the European authorities have never dared to impose the financial sanctions provided for as part of the “excessive deficit” procedure.

The evolution of deficits is directly linked to that of GDP, which determines the level of tax and social revenue. France stands out from other countries by its powerful social shock absorbers, which accentuate the deficit in the event of a crisis, and by its recurring difficulties in reducing expenditure during a growth phase. But since the inflationary shock linked to the war in Ukraine, France's trajectory has deviated in an unprecedented way from that of its neighbors.

In 2024, the French deficit could thus be more than three points higher than the average. A gap that has never been so high since the creation of the euro zone.