In 2020 and 2021, the French government will have opened the floodgates of public spending: aid to businesses, short-time working, investments in health for mass vaccination … enough to blow up the budget. Public debt reached 115.7% of GDP in 2020, and is expected to continue to increase. But austerity will quickly take over.
2.8% of public deficit in 2027 for France
In the forecasts sent Thursday, April 8, 2021 by the Ministry of Finance to the High Council of Public Finances (HCFP), the government announces the color: by 2027, the public deficit will have to drop back below the 3% mark, the arbitrary bar set by the European Union within the framework of the Stability Pact. But, to do this, we will have to significantly reduce expenses: in 2020, the public deficit was 9.2%, to 211.5 billion euros.
The timetable announced by the government is also rather precise: while the debt should climb to 118.3% by 2025, the economic and health crisis continuing into 2021 and having repercussions for several years, from 2026. it will be better with a deficit of 118.2%. Then, in 2027, it is expected to drop subsequently to 117.7%. ” We are giving ourselves five years to restore French public finances “Said the Ministry of the Economy.
Austerity: the watchword for the next five-year term
How to lower public spending and reduce the deficit? Simple: by reducing spending… since the government refuses to increase taxes, against the current of the rest of the world. Thus, the next five-year term should be marked by major austerity: the increase in spending should be limited to + 0.7%, compared to + 1% between 2017 and 2019 for example.
Bercy plays on the words: the government refuses to speak of a “brutal” drop in spending, but announces “major efforts”.
Naturally, the reform of Unemployment Insurance, validated and which comes into force in 2021, or the pension reform, put on hold but still in the government’s boxes, should be part of the tools mobilized.