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The government’s fiscal trajectory unchanged ahead of the presidential election

Between the escalation of electoral promises by candidates and the surge in inflation which leads the government to spend billions to support purchasing power, we would have almost forgotten it. And yet. Public debt reached 112.9% of gross domestic product (GDP) in 2021, INSEE announced on Tuesday April 29, at 2813.1 billion euros. As a percentage of GDP, this is less than in 2020 (114.6%) and below the latest executive forecast (115.3%). As for the public deficit, expected “around 7%” by Bercy, it amounted to “only” 6.5% of GDP. And this, thanks to the marked increase in revenue (VAT and social security contributions in particular) driven by the economic rebound. Tax receipts thus rebounded by 47.7 billion euros, whereas they had fallen “only” by 31.4 billion in 2020.

Expenses “rise sharply” (+ 4%) notes INSEE, but still less than in 2020 (+ 5.1%). On the other hand, the debt burden (interest due) swelled by 5 billion, because a certain number of government bonds are indexed to inflation. “A smaller deficit than expected, a lower debt, this is the result of the effectiveness of our policy to protect the French, which has enabled a historic rebound in growth and employment”welcomed the Minister of the Economy, Bruno Le Maire.

Paris now has, in principle, until April 30 to send Brussels the stability program, which specifies each year its medium-term budgetary objectives. But the schedule should be changed somewhat. First because of the dates of the presidential election – April 10 and 24 – then given the uncertainty about the economic fallout from the war in Ukraine.

Read also Presidential election 2022: debt, blind spot of the campaign

“In 2020 [au début du premier confinement], the European Commission had accepted that countries send less detailed forecasts, based on different scenarios. It could be the same this time.”says Eric Woerth, chairman of the finance committee of the National Assembly and recently rallied to the candidate Macron. “They will take Ukraine into account”we confirm at Bercy.

If Mr. Le Maire has admitted that France will have to revise its forecasts, he should not announce anything before the election. But in the majority, the cause seems understood: keeping the forecast of 4% growth this year seems illusory, and the objective of 5% deficit, however cut to the line at the end of the year by adjusting the amending budget 2021, very unlikely.

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