France's deficit is slipping and is estimated at 5.5% of GDP in 2023 | EUROtoday

Published on : 03/26/2024 – 08:47

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The dangerous information has been within the pipeline for just a few days, it’s now official: France's public deficit has reached 5.5% of GDP in 2023, INSEE revealed on Tuesday March 26. This is far more than the 4.8% deficit achieved in 2022 and the 4.9% initially deliberate by the federal government for 2023.

This slippage is defined specifically by revenues which “slow down significantly in 2023”, up 2% in opposition to +7.4% in 2022, explains the National Institute of Statistics and Economic Studies in a press launch.

They had been “penalized by the slowdown in the economy, new measures on compulsory deductions, and a decline in transfers received”, specifies the establishment, referring to taxes “almost at a standstill”, rising “only by 0 .3% (+2.8 billion euros) after +7.9% in 2022.” VAT revenue, in particular, “slowed down significantly to +2.8% after +7.6%”.

Spending has also slowed down “a bit”: “It will increase by 3.7% after +4% in 2022”, signifies INSEE. “As a proportion of GDP, spending continues to decline and stands at 57.3% of GDP after 58.8% in 2022,” he specifies, but it surely stays “significantly higher than before Covid ( 55.2% of GDP in 2019).

Operating expenses (+6%) and social benefits “accelerate” (+3.3%, after +1.2% in 2022), driven “by the revaluation of benefits indexed to inflation”, indicates the institution.

“Each 0.1 point” of GDP of further deficit “represents around 3 billion” of lacking euros

“Remuneration paid is also accelerating: +4.6% after +4.4%, with the full-year effect of the July 2022 index revaluation, the July 2023 revaluation, and more dynamic public employment than in previous years “, it is specified.

The Minister of Economy and Finance, Bruno Le Maire, reiterated on Tuesday that he was “opposed to any tax increase” in France, despite the announcement of a spiraling public deficit.

“We can perfectly make savings on public spending without digging into the pockets of the French and I remain totally opposed to any increase in taxes on our compatriots,” declared the minister on RTL, noting that companies additionally “pay taxes”. He only showed himself open to an increase in the contribution on the inframarginal income of energy companies, inflated in recent years by the rise in energy prices.

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The INSEE figure on the deficit was particularly awaited because every decimal place counts for public finances. “To put it simply, each 0.1 point” of GDP of additional deficit in 2023 “represents around 3 billion” euros missing from state coffers, economist Mathieu Plane explained to AFP.

The government had warned at the beginning of March that the deficit would be “considerably” larger than the 4.9% initially forecast and hypothesis had been rife for every week on the precise determine, notably for the reason that press's point out of a deficit at 5.6% of GDP.

The French public debt reaches 110.6% of GDP on the finish of 2023, mentioned the National Institute of Statistics and Economic Studies. This is lower than in 2022, when it stood at 111.9%, however nearly a share level above the federal government's forecast (109.7%).

With AFP