The Court of Auditors’ thick report on public finances should have been made public at the end of June. Postponed by a few weeks by the early legislative elections, its publication, on Monday 15 July, sounds like a warning to the next government. Despite the absence of a clear majority in the National Assembly, reducing the public deficit will have to be an “imperative”, argues Pierre Moscovici, the first president of the Court of Auditors. “It’s neither right nor left”is trying to hammer home the financial magistrate, for whom “We cannot finance intelligent public policies if we do not reduce our debt.”
While the debt burden should already become the State’s largest budget in 2027, with 83 billion euros ahead of that of National Education, its weight reduces the room for maneuver to finance other political priorities, argues the Court of Auditors. Starting with the energy transition, which will require a massive increase in investments, particularly public, at the same time as it causes a drop in tax revenues on fuels in particular.
Budget forecasts at risk for 2024
The prospects for the recovery of public finances are looking difficult. Especially since the future government inherits a budgetary situation “worrying“, summarizes Pierre Moscovici. The report of the financial magistrates scratches the absence of adjustment of the outgoing government. 2023 was a “very bad year” for public finances with a slippage to 5.5% of the public deficit, in an economic context that is generally rather favorable. Despite the corrective measures taken by the outgoing government at the beginning of the year, “significant risks weigh on the trajectory of public finances for 2024”, recalls Pierre Moscovici. At the beginning of the year, the Minister of Economy Bruno Le Maire cancelled 10 billion euros of budget credits. And on July 11, he reaffirmed that he wanted to make an additional 10 billion euros of cuts this year to reach the target of 5.1% public deficit in 2024. However, “These objectives are far from being achieved”points out Pierre Moscovici.
But the Court of Auditors is concerned that a “big party» of this program is «poorly documented» and its organization «uncertain”The agricultural crisis at the beginning of the year and then the tensions in New Caledonia have also generated new expenditure, while the anticipated new revenues, such as the tax on rents which should have brought in 3 billion euros, have not yet been validated by Parliament.
As things stand, the return to 2.9% of the public deficit in 2027 is considered as “unbelievable and unrealistic” by the Court of Auditors.
Overly optimistic growth forecast for 2025 and 2026
The magistrates of Rue Cambon believe in particular that the growth forecast adopted is too optimistic. In its trajectory transmitted to Brussels in the spring, the outgoing government predicted an increase of 21 billion euros in compulsory levies, of which 4 billion euros attributable to the increase in the TICFE according to the calculations of the financial magistrates. And it aims for an unprecedented effort to reduce public spending, the increase in volume of which should be limited to 0.2% per year. However, these two effects, provided that they are well implemented, risk slowing down growth prospects and therefore ultimately tax revenues.
The future government therefore looks set to face a steep climb. The Court of Auditors is careful not to decide on the political choices most likely to achieve this.“These are not the same choices on the right and on the left, but the common path must be to reduce the debt.”points out Pierre Moscovici. For the first president, the margin for increasing tax revenues is “quite limited”, even if the tax debate should not be ignored.
The Court of Auditors will not be the only one to increase the pressure. The European Council must examine next week the opening of a procedure for excessive deficit against France, already announced in mid-June by the European Commission. Negotiations are still possible with Brussels to postpone the return to 3%. “The Commission is still open. But it’s ‘effort versus deadline'”»sums up the man who is also a former European Commissioner.
Source: www.usinenouvelle.com
