Public deficit: how does the government plan to find an additional 10 billion euros this year?
Controlling the public deficit promises to be difficult. The executive announced on Wednesday April 10 that it now anticipated a public deficit of 5.1% of gross domestic product (GDP) in 2024, above the 4.4% initially forecast. This new estimate results from the significant slippage recorded in 2023, with a deficit which reached 5.5% of GDP instead of the 4.9% initially projected.
To achieve this corrected objective, the Ministry of Economy and Finance warned that it would have to find an additional 10 billion euros this year, in addition to the 10 billion euros in savings already announced in February. Here are the executive’s savings and new revenue options.
The Ministry of the Economy first intends to request a “additional effort” of“around five billion euros” to state administrations. To do this, Bercy points out that it has a “significant room for maneuver” of “seven to eight billion euros” of credits which were frozen as a precaution at the start of the year.
As for the first savings package of 10 billion euros, the ministry is, for example, mentioning avenues around real estate spending. In February, the Minister Delegate in charge of Public Accounts, Thomas Cazenave, had already announced aa 25% reduction in office space occupied by the State. A new contribution from state operators is also not ruled out. At the end of March, the Minister of the Economy, Bruno Le Maire, committed to “write to all state operators” of which “treasuries are doing well”citing “the National Cinema Center” or “Business France”to ask them to formulate “savings proposals”.
Bercy also intends “reaffirm” with local authorities the budgetary objectives which have been set for them. The goal is not to ask them “extra effort”, assures the ministry, but to ensure that the increase in their operating expenses is 0.5 points below inflation, as provided for in the public finance programming law. The ministry points out, for 2023, a “skid” of these expenses which increased by 5.9%, due in particular to an increase in “personnel and purchasing expenses in a context of inflation” and a “dynamic investment”. With inflation forecast at 2.5% in 2024, the government is urging communities to limit the increase in spending to around 2% in 2024 and thus hope “to secure” 2.5 billion euros.
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