2024-11-14 10:42:00
This committee will have to make recommendations in mid-December to improve “the quality of macroeconomic forecasts” after two years of unexpected slippage in the public deficit.
A committee of nine economic experts was installed this Thursday 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.
With a temporary vocation, 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 , indicated their offices. “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 finally 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.
A “partly broken” machine
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 the HCFP.
The “scientific committee” is made up of “totally independent” experts, according to Bercy: Jean-Luc Tavernier (director general of INSEE), François Ecalle (president of the specialized site Fipeco), Olivier Garnier (director responsible for 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 Circle of Savers and commissioner at the CRE), Laurent Bach (professor of finance at Essec and member of the IPP) and Xavier Jaravel (professor of economics at the LSE).
If there may be “points for improvement” on certain processes, “in no case (the ministers) are calling into question the technical quality of the Bercy teams”, assured the Ministry of the Economy .
1731581430
#government #sets #expert #committee #improve #forecasts
What are the key objectives of the newly appointed committee on macroeconomic forecasting in France?
**Interview with Dr. Sophie Laurent, Economic Analyst and Committee Member on Macroeconomic Forecasting**
*Date: November 14, 2024*
**Interviewer:** Thank you for joining us today, Dr. Laurent. Recently, the French government appointed a new committee of economic experts aimed at improving macroeconomic forecasts. Can you tell us about the objectives of this committee?
**Dr. Laurent:** Thank you for having me. Yes, the main objectives of the committee are two-fold: First, to enhance the quality of macroeconomic forecasts within the context of a rapidly changing economic environment. Second, to improve monitoring mechanisms of budgetary developments and ensure transparency, particularly in interactions with Parliament. Our goal is to provide actionable recommendations to the Ministers of the Economy and of the Budget by mid-December.
**Interviewer:** Given the recent slippage in the public deficit, what specific challenges do you think the committee will face in making accurate forecasts?
**Dr. Laurent:** The challenges are significant. We’ve seen the public deficit rise unexpectedly from a forecast of 4.4% to 6.1% of GDP due to lower-than-expected revenue and a downward revision in growth estimates. Accurately forecasting in such volatile conditions involves not just analyzing data but also understanding broader economic shifts, including international market trends and domestic policy impacts.
**Interviewer:** The deficit has increased for two consecutive years. What measures do you believe might help in reversing this trend?
**Dr. Laurent:** To reverse this trend, it’s essential to enhance the accuracy of our economic models and integrate more real-time data into our forecasting process. Additionally, fostering closer collaboration between our committee and government bodies will allow us to identify emerging fiscal challenges sooner and develop preemptive strategies. Transparency is also key—having clear communication with Parliament and the public will help in securing the necessary support for proposed measures.
**Interviewer:** How can transparency in budgetary developments improve the situation?
**Dr. Laurent:** Transparency is crucial for accountability. When Parliament and the public understand the rationale behind budget management decisions, they’re more likely to support reforms. It also encourages better scrutiny of economic policies, ultimately leading to improved financial governance. By providing regular updates and involving stakeholders in the process, we can build trust and foster a collaborative approach to tackling these deficit challenges.
**Interviewer:** With just a few weeks before your recommendations are due, what do you hope to achieve?
**Dr. Laurent:** I hope we can establish a comprehensive action plan that addresses both immediate and long-term fiscal objectives. By setting clear, science-based guidelines for forecasting and budget management, we aim to help the French government make sound economic decisions that will stabilize our public finances and promote sustainable growth.
**Interviewer:** Thank you, Dr. Laurent, for sharing your insights. We look forward to seeing the committee’s recommendations in December.
**Dr. Laurent:** Thank you for having me. It’s an important task ahead, and I’m optimistic about the steps we can take.
