It is a copy that will be scrutinized by the opposition received today by Elisabeth Borne, the Prime Minister. The amending finance bill, the PLFR is ready and the executive sends it to the high councils of public finance, as is tradition.
Growth revised downwards: 2.5% for 2022
On the bad news side, we note this growth forecast revised downwards for the French economy. From 4% provided for in the last finance law, the government has increased to 2.5% for this year. In question, the war in Ukraine, which slowed the economy and caused fuel prices to soar a little more, but also the omicron virus at the start of the year which limited activity.
Another element that has slowed down the momentum of the recovery: the strategy « zero covid » of China, and the confinements decided this first half, shaking up the supply chains and causing delays in supplies.
In this international but also unstable health context – marked in particular by a return of the virus at the moment in Europe – the uncertainty of the business climate remains high and it is therefore with caution that the government is posting its 2.5% growth. .
A French economy that resists inflation
Nevertheless, according to the executive, the fundamentals of the economy are holding up well. With 2.5% growth, France is one of the best off countries in the euro zone.
Similarly, it is in France that inflation will be the lowest this year. The government expects consumer prices to rise by 5% on average. A forecast a little lower than that of INSEE, which anticipates 5.5% on annual average. But this differential, explains Bercy, is due to the reference price of the barrel of oil chosen to perform the calculation. The Ministry of the Economy has opted for a barrel of around 110 euros for the year 2022. A little more for INSEE.
Revenues on the rise
But there is also good news. The first is job dress. Admittedly, the number of job creations will slow down sharply during the second half of the year, but the French economy will continue to post a positive balance throughout this year. While nearly 80,000 jobs were created in the first quarter, a total of 115,000 will be reached by the end of the year. These jobs are all the more important as they make it possible to garner social income (contributions) but also tax revenue, via income tax. And limit the amount of benefits to be paid, via unemployment insurance or social minima.
According to the government, consumption should also hold, which will also allow money to enter the state coffers. The resumption of air traffic, that of international tourism will also make it possible to boost French VAT receipts.
Without forgetting finally, revenues higher than forecasts on the side of the corporation tax. In particular thanks to a 2021 balance mechanism paid in 2022. This set will allow, according to government calculations, the State to collect in 2022 up to 50 billion in revenue, i.e. more than the National Education budget. It’s 2% of GDP.
No debt reduction in sight
But far from reducing the French debt, which will remain at 111.9% at the end of the year, Bercy will allocate this excess spending to make up for the losses. The objective: to maintain the initial deficit forecast, around 5%.
This surplus of money – some might see it as a kitty, but the government rejects the term – will mainly be used to pay for the purchasing power measures that the government intends to present via a law, on July 6, in the Council of Ministers. On the menu, the revaluation of 3.5% of the salary of civil servants, that of 4% of retirement pensions, the maintenance of the tariff shield on gas until next December or the extension of the rebate of 18 euro cents on the liter. Bercy did not want to communicate this Tuesday the exact costing of the expenses of these measures, but the first estimates are around 25 to 30 billion euros.
In the political context, it’s a safe bet that the allocation of this surplus revenue to new expenditure, even to maintain the purchasing power of the French, will cause reactions on the right and on the left. The Republicans will demand that this additional 50 billion be used to reduce the debt. On the left, the Nupes will see an opportunity to further increase the purchasing power package, already deemed insufficient.
