Paris (AFP)

Forced to integrate an unfavorable macroeconomic context, the French government has revised downward its growth forecast for 2020, while the tax cuts announced in response to the movement of "yellow vests" will burden the debt reduction.

Unveiled by the Ministry of Economy and Finance ahead of the presentation of the draft budget for 2020, on September 25, the government scenario only shows a growth forecast of 1.3%, against 1 , 4% expected so far.

France will thus be caught up by the economic slowdown that is already affecting the global and European economy, aggravated by trade tensions, while growth should already fall this year to 1.4%, against 1.7% in 2018.

However, Bercy defends the resilience of the French economy, which would remain driven by internal drivers: household consumption, business investment, good performance of the industry, and lower unemployment.

This cautious forecast for 2020, however, further complicates an already tense fiscal equation, with all the purchasing power measures announced in response to the "yellow vests" movement and the difficulty of finding enough savings to finance them.

- Savings: the account is not there -

Consequence in this first budget post-"yellow jackets": if the public deficit will drop well next year (from 3.1% of GDP in 2019 to 2.2%), much of the decline is explained by the the transformation of the competitiveness and employment tax credit (CICE) into a decrease in charges that had plummeted last year's fiscal year. Excluding this exceptional effect, the deficit will actually stagnate, while the government wanted to reduce it to 2% in the forecasts forwarded to the European Commission in the spring.

The difference with this forecast is also explained by the income tax decrease of 5 billion euros announced by Emmanuel Macron following the movement of "yellow vests" and the reindexation of part of the pensions pensions on inflation at a cost of 1.5 billion euros.

Public spending will also increase further in 2020, and its level relative to GDP, currently the highest in the European Union, should drop slightly from 53.8% in 2019 to 53.4% ​​in 2020, while the government still hopes a drop of 3 points over the entire five-year period.

Opposite, the government could not find the savings to finance all of this extra spending. Elimination of tax loopholes in favor of companies, offset the drop in the corporate tax, plan on certain social benefits: the account is not there. And this even if the decline in interest rates should save 5 billion euros on debt charges.

The government is thus lagging behind the reduction of the public debt - 98.7% of GDP expected in 2020 after a jump to 98.8% this year - yet one of the major objectives of the five-year period with the decrease of the mandatory contributions . The latter should also slightly rise to 44% of GDP next year, after a drop of 1.2 point to 43.8% this year.

A decision taken in Bercy, where it is said that the pace of decline in spending and deleveraging should be adjusted to take into account the demands of the French. "You can not pretend that there was not a social movement of very great magnitude," explained this summer Bruno Le Maire to justify the increase in public spending.

These macroeconomic forecasts will be examined in the coming days by the High Council of Public Finance, which must render an opinion on the scenario chosen by the government to establish its 2020 budget.

© 2019 AFP