2024-10-21 17:13:00
The multi-year budgetary trajectories displayed by the various governments over the past thirty years have not really been respected. Could this experience a different fate? The executive presented its public finance strategy for 2029 to the National Assembly this Monday, without managing to completely dispel the vagueness surrounding the drivers which should help it in its task.
In the coming days, Michel Barnier’s team must send to Brussels its Medium-Term Budgetary and Structural Plan (PSMT) – one of the new features imposed by the reform of European budgetary rules which came into force in the spring – which marks the stages which should bring the deficit below 3% by 2029. It is this document which was presented to the deputies ahead of the evening examination of the finance bill for 2025, in a provisional version which led to the ire of several figures at the Palais-Bourbon.
Doubts about growth
In fact, if the destination is clearly displayed, the path to get there still seems dotted. The objective is to reduce the deficit from 6.1% of GDP this year to 5% next year, before -4% in 2027 then -2.8% in 2029. A brake, but not enough to really reduce the debt which, after a peak in 2027 at 116.5% of GDP, will still remain at 115.8% in 2028, well above this year’s 112.9%.
“The meaning of this PSMT is the recovery of public accounts and support for growth,” said Antoine Armand, the Minister of the Economy, to the deputies. In fact, the government is counting on robust growth to help it in its task. After 1.1% expected next year, this is supposed to increase to 1.4% in 2026 then 1.5% the following two years. However, the 2025 figure is already contested by the OFCE, which judges that the budgetary effort planned to redress the accounts will weigh on activity. The doubts also concern the following years. “The actual growth scenario is optimistic,” estimated the High Council of Public Finances (HCFP) in an opinion delivered on October 9.
The document also does not allow us to see how the government intends to support the economic engine to reach this level. Several major areas of reform – achieving full employment, reindustrialization, strengthening competitiveness and accelerating the ecological transition – are announced to convince European partners to give France two more years to return below the 3% threshold. deficit, but above all by summarizing the measures launched since 2017.
Antoine Armand also repeated from the podium that he was counting on the simplification bill which had been nipped in the bud with the dissolution.
5 billion savings
Beyond that, the government also promises to strengthen the governance of public finances. More concretely, this means that the expenditure review exercise launched by the previous government – which fueled certain savings avenues in the 2025 budget, such as cuts in learning aid or the reduction in numbers in Education national – will be perpetuated. “This should make it possible to eliminate between 2025 and 2027 at least 5 billion euros of non-priority spending,” announced Antoine Armand.
The amount seems relatively small compared to the government’s budgetary ambitions. The effort to consolidate the accounts will not stop in 2025, and the budgetary plan provides for an annual structural adjustment of 0.7 to 0.8 points of GDP from 2026. “This represents an effort of 21 to 25 billion euros per year,” explained Charles de Courson, the general budget rapporteur to the National Assembly.
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