France's deficit is slipping and is estimated at 5.5% of GDP in 2023

The bad news has been in the pipeline for a few days, it is now official: France's public deficit has reached 5.5% of GDP in 2023, INSEE revealed on Tuesday March 26. This is much more than the 4.8% deficit achieved in 2022 and the 4.9% initially planned by the government for 2023. 

This slippage is explained in particular by revenues which “slow down significantly in 2023”, up 2% against +7.4% in 2022, explains the National Institute of Statistics and Economic Studies in a press release. 

They were "penalized by the slowdown in the economy, new measures on compulsory deductions, and a decline in transfers received", specifies the institution, referring to taxes "almost at a standstill", increasing "only by 0 .3% (+2.8 billion euros) after +7.9% in 2022.” VAT revenue, in particular, “slowed down significantly to +2.8% after +7.6%”. 

Spending has also slowed down "a little": "It increases by 3.7% after +4% in 2022", indicates INSEE. “As a proportion of GDP, spending continues to decline and stands at 57.3% of GDP after 58.8% in 2022,” he specifies, but it remains “significantly higher than before Covid ( 55.2% of GDP in 2019). 

Operating expenses (+6%) and social benefits "accelerate" (+3.3%, after +1.2% in 2022), driven "by the revaluation of benefits indexed to inflation", indicates the institution.

“Each 0.1 point” of GDP of additional deficit “represents around 3 billion” of missing euros

“Remuneration paid is also accelerating: +4.6% after +4.4%, with the full-year effect of the July 2022 index revaluation, the July 2023 revaluation, and more dynamic public employment than in previous years ", it is specified.

The Minister of Economy and Finance, Bruno Le Maire, reiterated on Tuesday that he was "opposed to any tax increase" in France, despite the announcement of a spiraling public deficit.

“We can perfectly make savings on public spending without digging into the pockets of the French and I remain totally opposed to any increase in taxes on our compatriots,” declared the minister on RTL, noting that businesses also “pay taxes". He only showed himself open to an increase in the contribution on the inframarginal income of energy companies, inflated in recent years by the rise in energy prices.

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The INSEE figure on the deficit was particularly awaited because every decimal place counts for public finances. “To put it simply, each 0.1 point” of GDP of additional deficit in 2023 “represents around 3 billion” euros missing from state coffers, economist Mathieu Plane explained to AFP.

The government had warned at the beginning of March that the deficit would be "significantly" higher than the 4.9% initially forecast and speculation had been rife for a week on the exact figure, notably since the press's mention of a deficit at 5.6% of GDP.

The French public debt reaches 110.6% of GDP at the end of 2023, said the National Institute of Statistics and Economic Studies. This is less than in 2022, when it stood at 111.9%, but almost a percentage point above the government's forecast (109.7%).

With AFP

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