Public spending: authorities schizophrenia | EUROtoday

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Bruno Le Maire ended up taking off his rose-colored glasses. While all financial institutes anticipated decrease progress than what the federal government had deliberate for France in 2024 – the IMF was banking on 1%, the Banque de France, on 0.9% and the OECD, on 0.6% – Bercy ended up correcting its copy by reducing its forecasts to 1%, in comparison with 1.4%.

“It’s still far too optimistic,” says the centrist deputy specializing in public funds, Charles de Courson. “If Bruno Le Maire stops his denial of reality, it is surely because he has obtained new figures that we do not yet know and which are bad,” predicts economist Marc Touati. Problem: the whole state funds was established taking into consideration these inaccurate forecasts. However, a decline in progress results in much less tax income, but additionally extra spending, significantly with unemployment growing – it reached 7.5% within the fourth quarter, in comparison with 7.1% firstly of 2023.

To treatment this, the Minister of the Economy and Finance introduced ten billion euros in financial savings, however “no effort will be asked of the French”, assured Thomas Cazenave, the Minister of Public Accounts, who assured the ” after-sales service” announcements, on France Inter this Tuesday, February 20.

The government plans to tighten its belt without touching the Social Security or community budgets. Five billion euros will therefore be cut from the ministries' budgets, and another five billion will be deducted from certain public policies (one billion less for MaPrimeRenov', 800 million less for public development assistance, etc.). But at the same time, “the government continues to sign checks,” exasperates Marc Touati, president of the ACDEFI cabinet. Emmanuel Macron has in fact announced aid of three billion for Ukraine, aid of four hundred million for farmers, five hundred million for hospitals… “It's borderline schizophrenic,” reacts the economist.

Fear of a downgrade in France's score

In the ranks of the opposition, this contradiction raises fears of an announcement impact meant to reassure the score businesses, which should consider France's debt within the spring. A deterioration could be a nasty sign, just a few months earlier than the European elections. “It’s a big charade, the government has played dangerously with the forecasts from the start,” denounces Senator LR Jean-François Husson, funds rapporteur. As a reminder, French debt amounted to 111.7% of GDP within the third quarter of 2023, or greater than 3,000 billion euros. The authorities had set itself the target of decreasing the general public deficit to -4.9% of GDP in 2023. A trajectory which can most likely be tough to realize, the Minister of Public Accounts admitted on France Inter.

“I don't think the amount of savings is ten billion euros net. Ten is a very round number which allows for communication, but that is not necessarily what they are aiming for in practice,” estimates economist François Ecalle, who’s as an alternative relying on 4 to 5 billion euros. saved ultimately. But for the previous advisor to the Court of Auditors, these few billions might show adequate.

“I don't believe it is necessary to do more, the deficit will be higher, but, in the current situation, this is not the time to tighten the budget too much. Especially since in view of the new European budgetary rules, it is much less important to have a higher deficit if it is due to the economic situation,” judges the president of Fipeco. A place that Marc Touati doesn’t share: “I am worried. The problem in France is not just a matter of saving ten billion, it is an entire operation that must be reviewed. And I don’t see any political will to reduce public spending,” he warns.

The authorities, which promised to not enhance taxes and doesn’t want to reduce an excessive amount of on public spending for worry of triggering a social disaster, finds itself in an deadlock. Bruno Le Maire, nonetheless, left himself a method out by elevating the potential of passing an amending finance legislation this summer time – as soon as the political deadlines have ended – if the state of affairs has not improved. But for Marc Touati, it’s nonetheless not sufficient. “We should completely reform public finances,” he argues.