The public deficit of france has declined in 2018, settling for the second consecutive year under the helm of “3%”, on a background of growth more dynamic than expected. A cause of satisfaction to the executive, then a new skid is looming for 2019.
According to a first estimate published on Tuesday by the Insee, the balance of public accounts, combining the State budget, the social Security and those of the local authority, amounted to 2.5% of gross domestic product, its lowest level since 2006.
This figure is lower than the forecasts of the government, which had said in January to expect a public deficit of 2.6%. It appears, also down 0.3 point compared to the deficit level reached in 2017, revised upwards from 2.6% to 2.8% of GDP.
“It is always better to be at zero”, but it is “a point of GDP less” in 2016 (3.5 percent), pointed out on RTL, the minister of public Accounts, Gérald Darmanin. It is “the equivalent of more than 10 billion euros of efforts made,” he added.
This result, reached the favour of a slightly faster growth than expected, at 1.6% instead of 1.5%, has allowed the public debt to stabilize at 98.4 per cent of GDP. Expressed in gross figures, the debt has nevertheless increased, to $ 2.315 billion euros, compared to 2.258 billion in 2017.
“Stabilizing public debt and reducing the more than expected our deficit to 2.5 per cent in 2018, we have put an end to the drift continues in our public finances for more than 10 years,” said on twitter, the minister of Economy, Bruno Le Maire, promising to “continue the recovery” of the public accounts.
“We must continue our work,” added Gérald Darmanin, recalling that the public accounts had been degraded in the last year through the takeover of the debt of the SNCF. “The debt has stabilized, even as it has put the train inside. So, in fact, it has decreased”, he judged.
– “The path of the receding” –
In its draft finance bill initial, the executive had expected a decrease in the deficit more ambitiously, to 2.3% of GDP. But the slowdown in economic activity, after a growth of 2.3 per cent in 2017, had obliged it to reduce its forecast to 2.7%, and 2.6% of GDP.
The decline in the deficit to 2.5% shows “that the economic policy pursued since 2017 is bearing fruit”, insisted in a joint press release, Bruno Le Maire, and Gérald Darmanin. “Our objectives in terms of public expenditure have been consistently met and even exceeded,” they insisted.
According to Insee, the weight of expenditure has declined by 0.4 percentage points to reach 56% of GDP (or 54.4% excluding tax credits), 1.318,5 billion euros. A decrease related to the efforts made by the local communities and the institutions of social security, the deficit has been divided by four to 1.2 billion euros.
Revenue, meanwhile, rose 2.3%, compared with +3.8% in 2017, including a 6.2% increase in taxes on income. The rate of compulsory levies, however, fell 0.2 of a percentage point (45%), thanks to the decline of the housing tax and the abolition of employee contributions.
A dynamic welcome for the government, faced with an equation of the budget much more complicated than expected for 2019, which could give rise to friction with Brussels.
Because of the emergency measures announced in the face of the movement of the “yellow vests”, Bercy has indeed had to face up to 3.2% of its forecast deficit, already burdened by the transformation of the YEAR-a decrease of expenses, which will cost this year of 20 billion euros to public finances.
According to several economists, the slippage could be even more important: the government has in effect built its forecast on an assumption of a growth of 1.7%. But the latter is now expected to be 1.4%, and remains under the threat of the global downturn.
A return spot in the public deficit above the 3% mark is “not problematic”, but it will take “the path of flood-recession deficits and lower debt is to regain its course” after 2019, warned the european commissioner for economic Affairs, Pierre Moscovici.