The High Council of Public Finances (HCFP), an independent body attached to the Court of Auditors responsible for “assessing the realism of the government’s macroeconomic forecasts,” issued its opinion for the years 2024 to 2027 on Wednesday, April 17.
The HCFP judges the new trajectory for reducing the public deficit proposed by the government, which aims to return below 3% of GDP in 2027, lacking “credibility” and “coherence”.
Such a trajectory “would imply a massive structural adjustment between 2023 and 2027 (2.2 points of GDP over four years),” the Court of Auditors specified.
“The High Council considers that this forecast lacks credibility,” among other things because the documentation of this effort “never carried out in the past” remains “at this incomplete stage,” and that it “also lacks coherence,” particularly on the growth forecasts.
The quantified trajectory of the public deficit between now and 2027 has been known for a week, but the stability program that it summarizes will be presented this Wednesday to the Council of Ministers, marking the start of a perilous journey for French public finances.
This is not the first time that government forecasts have had to be revised downwards. Since February, bad budgetary news has been pouring in.
Growth in 2024 will ultimately not be 1.4% but 1%, while the deficit was 5.5% of GDP in 2023 instead of 4.9% as announced. And this year it will not be 4.4% but 5.1%.
Consequently, last February, Bruno Le Maire announced 10 billion euros in additional savings this year, then 10 billion again last week, without counting on the 20 billion savings in 2025.
Instead of the 12 initially calculated for 2024, the HCFP estimates that the government’s growth forecast, revised downward in February to 1% compared to 1.4% previously, “remains optimistic,” “even if it is not out of reach.”
But overall, “the GDP trajectory” retained in government forecasts for the period 2024-2027 “is overestimated,” estimates the HCFP.
“There is, therefore, a significant risk that the government’s assessment of potential GDP will subsequently be revised downwards, and therefore that the structural part of the deficit will be revised upwards,” it warns.
