LA TRIBUNE SUNDAY — The Court of Auditors has‑did she quantify the extent of the loss in value induced by Michel Barnier's concessions?
PIERRE MOSCOVICI — No. The counters are not stopped. Given the complexity of the parliamentary debate, the reality of the budget remains uncertain. But I want to recall the purpose of the exercise, sometimes a little lost sight of: not only must France have a budget, but it must be a good budget. But a good budget is a budget that reduces our deficits and controls our debt. Our debt [plus de 3 200 milliards d’euros] represents more than 110% of GDP; this debt itself generates an annual repayment charge of some 70 billion euros next year; four years ago, it was 25 – the equivalent of the budget of the Ministry of Housing -, this year, it is 53 – the Defense budget -, next year it will be almost the Education budget national budget, that is to say the first state budget.
This paralyzes public action and prevents us from investing in the future. We absolutely must now mark a clear inflection point and reverse this trend. We know that the debt will not decrease before 2027. But to do this, we must already begin a sharp slowdown. And to do this, reduce the deficits. I want to say this, because this is the institutional role of the Court of Auditors, watchdog of public finances. We need to regain control of our public finances. The 5% target must remain the objective of this budgetary discussion.
The EU defense budget is insufficient, points out the European Court of Auditors
Michel Barnier has some‑can he afford it? Aren't political circumstances preventing France from controlling its budget?
I'm not naive, I know politics, and I know the political equation. One: the Prime Minister, arriving late, presented an emergency budget to a common base which is neither majority nor homogeneous. Two: this budget marks the welcome desire to reverse the trend. Three: Michel Barnier was right to let the discussion take place without immediately triggering 49.3. In other words, the Prime Minister is doing what he can. However, all this meets a limit known from the start: the budget can only be voted on if the government avoids censorship of the RN.
« There will be a storm » in the event of censorship, warned Michel Barnier. Do you take these words into your own hands?
I don't know if it would cause a storm, but certainly a serious gale. Our credit would be reached. When we objectively examine the different scenarios, we see that we must not fall into catastrophism, but neither should we take cheap reassurance.
Marine Le Pen accused you of having accredited the hypothesis of a shutdown American style…
Wrongly! I never said that shutdown was likely! Even if the risk exists theoretically, it can and must be avoided, because the Constitution and the organic laws are well made. Either the debate goes beyond its conclusion, which is still a possibility, and the budget is neither voted nor refused; at that point, the government can promulgate a budget by ordinance. This is not the path that was taken, and I think that it would not be the right one. Second scenario: in the event of censure, Parliament can pass a special law which authorizes the government to collect taxes, and expenditures are executed on the basis of the previous year. Those who would be willing to censure the government have already said they would pass such a law.
So the State won't close up shop?
It wouldn't be the apocalypse, but it wouldn't be trivial. In this hypothesis, there would be a tax increase for low-income French people. Since the tax scale would not be indexed to inflation, around 400,000 non-taxable French people would become liable for income tax; several million others would see their taxes increase significantly. New investments, for example in our internal or external security, would be deferred. And the deficits would worsen significantly. Expedients to avoid shutdown exist, but they are extremely expensive. Not to mention the impact on the morale of the French of what still resembles a torture of Tantalus.
Income tax: these very costly tax loopholes for the State
How much could the financial markets make us pay for it?
Interest rate differentials with our partners would become higher. Today, they have grown significantly with Germany. The cost of our debt is now higher than that of the Greek debt. This degrades our credit and credibility, and could get worse.
Friday evening, however, Standard & Poor's kept its rating unchanged (AA-). Isn't that a reassuring sign?
This shows the deserved confidence that remains in the solidity of France. But also the awareness that the deadlines for the return to more balanced public finances risk being longer than expected, and the fear of political uncertainty.
How do our European partners, whom you know well, view us?
There is a whole mythology in France about the European Commission, the supposed architect of austerity. This is completely false: the Commission, and this is the meaning of the opinion delivered this week, has no desire to harm France, on the contrary. It includes temperature and pressure conditions, including political ones. On the other hand, it is legitimately demanding that France must reverse, and clearly, the expansionist course of its public finances.
Michel Barnier and the blackmailers
Not content with having made Michel Barnier give in, Marine Le Pen gives him lessons in good management: “ We are being told that increases will be canceled without giving us the funding.»
It would not be appropriate to add a brutal blow to the concessions that have been made. But the trajectory of public finances is multi-year. This year, it was probably inevitable, given the very short deadline for preparing the budget, to have a substantial fiscal effort. On the other hand, for the following years, it will be necessary to switch to another mode: expenditure savings mode. I hope that once we have passed the milestone of this PLF we will immediately begin collectively to prepare for the following years, and both the Court of Auditors and the High Council of Public Finances are ready to contribute to this.
In what way?
Through our reports and through in-depth spending reviews. Furthermore, our machine for forecasting growth, revenues and public spending is out of whack. These are inaccuracies, even forecast errors, which explain the significant slippage in our deficits in 2023 and the dark year 2024. I am convinced that we must entrust the validation of the Ministry of Finance's forecast to an independent authority, in order to to avoid both excess political voluntarism and too strong a constraint on the Administration.
Is this a service offer?
Entrusting such a mission to the High Council of Public Finances may be a solution, or even the solution. We need to put a little reason, transparency and independence back into all of this!
