This is a very good news for Emmanuel Macron. The government has recorded a deficit in 2018 a little less strong than expected. The hole between revenue and public expenditure in the last year has been reduced not to 2.7 % of GDP, to 2.5 %. In 2017, the deficit had reached 2.8 %. A decrease of 0.3 point welcome to limit the slippage in 2019. At the end of last year, the government had been forced to recognize that the deficit would exist this year to 3.2% of the approximately $ 11 billion of tax cuts and additional spending needed to quell the rebellion of the yellow Vests.
The team of Édouard Philippe, therefore, begins the year with a little wiggle room welcome to attempt to limit this gap to the eu rule of 3 %, due in large part to (0.9 percentage points of GDP) and the transformation of the YEAR-a decrease of employer contributions over the long term. “We are following the roadmap, 0.2% less than expected, it is the thickness of the stroke “, relativizes François Ecalle, a specialist in public finance and author of the website Fipeco, which reminds us that the growth on which the budget was based of 2019, 1.7 %, is likely not to be achieved and should be revised downward in may.
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This result can be explained in part by a growth in 2018 to be better than advertised so far. The activity grew 1.6 %, according to the latest estimate from the Insee, and not 1.5 %. A result close to the forecast of the government of 1.7 %, despite the strikes at the SNCF and the movement of the yellow Vests at the end of the year who have each had an impact of 0.1 percentage point of GDP, according to the Insee.
expenditures that are increasing 1.9 %
” By bringing two consecutive years, the public deficit below the threshold of 3 % of GDP for the first time in ten years, France shows its determination to meet the objectives of control of public finances and its european commitments. A deficit of 2.5 % in 2018 integrating the rail system, it is a point less than the deficit estimated by the Court of auditors to the arrival of the government “, and welcomed Gérald Darmanin and Bruno Le Maire said in a joint press release.
The increase in public expenditure slowing down after accelerating in 2017, at the end of the mandate of François Hollande. They have risen by 1.9% in current euros. But, given the rebound of inflation, they have increased only 0.3 % in volume, and decrease even when we exclude the tax credits, ” which is unprecedented in decades “, say the two ministers in their communiqué. “It’s not bad, it shows that the budgeting was sincere “, says François Ecalle. The increase in operating expenses has, in particular, slowed sharply, note Insee, through the freezing of the index point officials and the postponement of the redesign of their pay grid decided by François Hollande in 2019.
Evolution of public expenditure since 2000. Public expenditures are increasing steadily in value (+1.9 per cent) in 2018. But taking inflation into account, their progress is limited to 0.3 %, the smallest increase since 2011.
© Fipeco
54.4% of public expenditure compared to the GDP
These changes allow to the government’s public spending relative to GDP to decline. “The ratio of public expenditure (excluding tax credits) in relation to GDP has increased from 55 to 54.4 % between 2017 and 2018. The decrease of 3 points from the ratio registered in our goals is so entrenched, ” they say.
the decrease in The deficit was driven mainly by the social Security, but also, to a lesser extent, by local governments in surplus. The operating expenditures of the past have been contained, well below the increase limited to 1.2% as provided for in the contracts with the State signed by the greatest of them. On the other hand, the deficit of the State is a little hollowed, as a result of tax cuts as the property tax.
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The State has, however, ” spent $ 1.4 billion less than the targeted voted in the budget 2018 on the field of the standard of expenditure which can be controlled “, that is to say, out of the debt burden, in particular, emphasized the two ministers.
As to the compulsory levies, they are falling by 0.2 point, to 45% of GDP. The public debt is stabilized at 98.4 per cent of GDP, “for the first time since 2007,” emphasizes Bercy, which recalls the commitment of the government to ” engage in the reduction of the public debt ratio over the duration of the quinquennium “.
” All of this says nothing of what will happen in 2019 “, puts into perspective, however, François Ecalle. The level of growth is uncertain, as well as the output of the great debate may weaken the willingness of Emmanuel Macron to contain public expenditure and reduce the public deficit. Response in a few weeks.
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