France: a 2021 financial plan placed under the sign of economic recovery

Prime Minister Jean Castex during the presentation of the recovery plan for the French economy.

It was September 3, 2020. Ludovic Marin / Pool via REUTERS

Text by: RFI Follow

5 mins

This year, the government keeps presenting budget proposals.

After three corrections made to that of 2020 due to the crisis, he unveils Monday, September 28, his financial plan for 2021.

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Bercy is betting on growth of 8%, a staggering figure that will not succeed in erasing the losses inflicted this year by the coronavirus.

Under these circumstances, the government had to comply with a rather unusual exercise.

The issue this year is not for the government to " 

 " its budget by trying to slow down spending or find new revenue.

The objective is the recovery of the economy.

The recovery plan will therefore be central.

Of the

promised, 30 must be disbursed next year.

In terms of taxation, companies will benefit from the majority of support with 10 billion euros in production tax cuts, and investment aid among others.

Few savings measures unveiled

Alongside this exceptional component, the government intends to assume commitments made before the crisis.

The reduction in the housing tax will begin for the wealthiest households.

The funds promised to the Ministries of Justice and Defense are also confirmed.

But, for the moment, few savings measures have been unveiled.

For example, the crisis has ended in killing Emmanuel Macron's ambition to cut 50,000 positions in the state civil service during the five-year term.

The increase in spending should therefore be mainly financed by debt.

Debt should represent 116.2% of GDP and the public deficit remain at a high level: 6.7% of GDP.

But, France will not be slapped on the fingers.

The European Commission suspended fiscal rules until next year.

►Also read: France: the economic recovery plan greeted with caution

Politically, a recovery plan to relaunch the presidency of Emmanuel Macron

There is no question this year for the government to make ends meet by trying to curb spending or generate savings.

In an exceptional situation, completely unprecedented budgetary effort with this recovery plan of 100 billion euros to try to redress an economy at half-mast, hit hard by the health crisis.

Businesses will be the main beneficiaries, with more than 6 billion in support for youth employment.

But beyond that, Emmanuel Macron praises a plan for the future " 

 ", with subsidies to produce more in France and investment aid in the sectors of the future.

The ecological transition will benefit, for example, from 30 billion euros.

Is this an operation to seduce the French, after the green wave in the last municipal elections?

At 18 months of the presidential election, the head of state wants to show that he still has " 

 ".

It was one of the promises of Macronism.

The President is playing big: this economic recovery plan will of course also depend on his own political recovery.

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