Growth, debt… Bruno Le Maire caught up by the tough actuality | EUROtoday

Get real time updates directly on you device, subscribe now.

IIt is 8:10 p.m. this Sunday, February 18, the federal government wakes up. And Bruno Le Maire, Minister of the Economy, seems on our tv screens to announce a further budgetary tightening of 10 billion this 12 months.
Certainly, this effort seems very weak in comparison with the three,088.2 billion in debt beneath which the nation is crumbling, however all the identical, allow us to take a constructive have a look at this adjustment: Bercy is regaining its footing; Bercy is lastly sincere with himself and particularly with the French. “We need to make savings to keep our public spending under control,” the minister careworn on TF1.

Until then, its macroeconomic forecasts for 2024, and its ambitions for 2027 had appeared to many, and from their announcement in September 2023, “disingenuous”. There was motive, as a result of they hardly took under consideration the grey clouds in our sky: rising rates of interest, actual property slowdown, results of the return of utility of budgetary guidelines at European stage, financial coverage of the European Central Bank, geopolitical stress. Don't throw any extra away…

READ ALSO Red alert on debt: the Attal-Le Maire duo going through the problem of financial savingsBruno Le Maire's staff had placed on rose-colored glasses and established its plans primarily based on a forecast of gross home product (GDP) progress of 1.4% for this 12 months. Problem: solely Bercy believed in it; from the Banque de France (0.9%) to the European Commission (0.9%), together with the IMF (1%), everybody mentioned that this state of affairs was far too optimistic. The OECD (Organization for Economic Cooperation and Development) is even focusing on 0.6%. This Sunday, Bruno Le Maire corrected his copy, now relying on extra consensual progress at 1%. That is 0.4 factors of distinction, subsequently, with the preliminary forecast. To justify this downward correction, the minister notably highlighted the geopolitical context, the slowdown in China in addition to the poor state of affairs throughout the Rhine.

The shadow of the score companies

In any case, this revision, from 1.4% to 1%, is just not with out impact for the reason that goal for 2027 of a deficit beneath 3% of GDP is maintained, taking into consideration commitments to Brussels (–4.4% anticipated on the finish of 2024). Moreover, it’s written in black and white within the public finance programming legislation (LPFP), handed on the finish of 2023, which situations the disbursement of support from the European restoration plan (17.8 billion euros for 2023-2024). ). The authorities outlined its budgetary roadmap there.

It is subsequently certainly a query for Paris of making use of European guidelines once more after the Covid exception, with a debt which might fall from 111.7% of GDP within the third quarter of 2023 to 108.1% in 2017. this, with progress which might speed up to succeed in as much as 1.8% by this horizon, in line with Bercy. Obviously, the score companies, Moody's and Standard & Poor's, are watching over it… The shadow of a downgrade in France's score hangs over the nation. This additionally explains it.

The problem of the Europeans

Questioned by our colleague Philippine Robert, François Ecalle, former Justice of the Peace on the Court of Auditors and president of the location specializing in public finance administration Fipeco, shared the results of his calculations: “If we have 0.1 point less growth, this increases the deficit by 0.05 points. » Or around 1.4 billion euros. In view of its new forecasts, the government had to seek at least 5.6 billion. But Bruno Le Maire promised 10 billion additional savings. How will he go about it?

The 2024 budget previously provided for 16 billion in savings. An ambition which does not seem excessive, since 14 billion in gains would in fact be drawn from the gradual cessation of the tariff shield which protected households and businesses from the explosion in energy prices. For these new 10 billion, it is a question of cutting State spending, and not social or community spending. Or even in aid to Ukraine – support of 3 billion was announced on February 16 -. It is about “supporting freedom and democracy”, in line with the Minister of the Economy. In element, 5 billion effort can be requested from every ministry for his or her working prices; and 5 billion can be drawn from public insurance policies (1 billion much less for improvement support, 1 billion much less for state operators, 1 billion much less for the Renovation Prime…) All this in instantly by decree, and never by way of a amending finance legislation. A number of months earlier than the European elections, the federal government needs to keep away from heated debates in Parliament and the umpteenth use of 49.3. However, Bruno Le Maire didn’t rule out recourse to such a textual content this summer time, that’s to say after the continental electoral deadline.

What in regards to the 2025-2026-2027 monetary years? The state of affairs is already wanting extra sophisticated, as a result of the federal government will now not be capable of depend on the artifice of the gradual finish of shields in opposition to power inflation. In the approaching weeks, the conclusions of a spending evaluate – this entails sifting via a sure variety of expenditures to detect the least efficient – ought to seem on the initiative of Bercy, to chart new avenues for financial savings. .

Free the economic system

To compensate for these “10 billion”, it might have been doable to depend on new revenues. But nobody, even essentially the most optimistic at Bercy, believes in a revival of consumption, with households declaring nonetheless excessive financial savings intentions, or in a shock when it comes to overseas commerce. The latter has, for twenty years, been one of many main black spots in our economic system, with a commerce stability deficit which reached 99.6 billion euros final 12 months, and underlines the weak point of our business. There would have been one other method: to extend taxes.

But a number of months earlier than the elections, for which the National Rally is introduced as the large winner by pollsters, the monitor has been dominated out. “For seven years, we have consistently refused to raise taxes. We will not stray from this line,” insisted Bruno Le Maire. However, as our colleague Mathilde Siraud defined, the Minister of the Interior, Gérald Darmanin, would have been in favor of taxing the richest or the biggest corporations.

There can be one other option to generate income: generate progress. Yes, we agree, it seems to be just like the story of the snake that bites its personal tail! But why not dream slightly? Because, along with taking out its scissors, the State is aiming for a brand new reform of unemployment insurance coverage, which may unwind a stagnant labor market. For its half, Bercy has promised to launch this 12 months, or no less than to relaunch, three tasks well-known to the French, usually open, by no means accomplished: annuities, administrative and normative simplification, in addition to monetary attractiveness. A holy trinity of financial liberation which may, if properly managed, give an actual enhance to the nation. Without worrying, with out greater than motive, in regards to the German chilly and the little Chinese type.