Paris (AFP)

Tax cuts for households, few savings and less decline in the deficit: the government will unveil Thursday evening a draft budget for 2020 still largely devoted to the demands expressed during the crisis of "yellow vests".

Public Accounts Minister Gérald Darmanin summed up the executive's slogan: "We preferred to lower taxes faster than the deficit", last week in an interview with the Parisian.

In total, the government should ratify more than 9 billion euros of reduction of levies for the French in its draft budget law, which will be officially presented Friday in the Council of Ministers.

Main measure: the income tax will drop by 5 billion euros, as announced by President Emmanuel Macron in the spring after the "great national debate".

In parallel, the abolition of the housing tax will continue and will affect next year 80% of households, a gain of more than 3 billion euros in purchasing power.

In the face of a still tense social climate, which could worsen with the pension reform project, the government has stepped on eggs in recent weeks to find savings and finance these measures.

Last jolt is the abandonment, just 24 hours after its disclosure, of the reduction of a benefit for seniors who employ home help.

In the end, the Executive has made the choice to focus primarily on businesses, with 1.3 billion euros in savings generated by the elimination of tax loopholes and a smaller decline in corporate tax.

What stir up the discontent of employers who denounce a step back, after the favorable measures that companies have benefited at the beginning of five years. The Medef estimates that it will suffer an increase "of the order of a billion euros" with the measures provided, when Bercy says he counted a relief of one billion.

The draft budget law will also maintain the virtual freeze of family allowances, personalized housing assistance and retirement pensions, which will not be indexed to inflation except for pensions of less than 2,000 euros.

- slow growth -

The state will also continue to lose weight, but at a much slower pace than this year. The government expects a little less than 2,600 job cuts in the state civil service next year, compared to 4,100 in 2019.

Again, the crisis of "yellow vests" has slowed the initial intention by bringing out a need for "proximity to public services", according to the Secretary of State in charge of public service, Olivier Dussopt.

With less than six months of municipal elections, the government is also expected on local finances and in particular on the details of the compensation mechanism for the municipalities of the housing tax.

The equation is therefore complicated and all the more so because the government has had to downgrade the economic growth forecast that underlies its draft budget.

The increase in the gross domestic product will be reduced to 1.3%, against 1.4% expected this year, reducing some budgetary room for maneuver.

- stagnation of the deficit -

This forecast is considered "plausible" by the High Council of Public Finance (HCFP), in an opinion to be published Friday and that AFP has procured, which however emphasizes that it does not take into account a Brexit without agreement .

Consequence: the deficit is expected to fall well next year (from 3.1% of GDP in 2019 to 2.2% in 2020), but if we remove the impact of the transformation of the tax credit for competitiveness and employment (CICE) down social contributions, it will actually stagnate.

The public debt will therefore barely fall, to 98.7% of GDP next year, after 98.8% this year, despite the breath of fresh air brought by low interest rates.

The effort is "practically nil" to respect the initial trajectory of the structural deficit, notes the HCFP.

"It is a budget (...) in continuity with precedents but which bears the trace of a less buoyant economic environment and, above all, the trace of the social crisis and the budgetary measures made to try to answer it" , summarizes Hélène Baudchon, economist at BNP Paribas.

© 2019 AFP