Brussels, 13/04/2016 (Agence Europe) - The stability and reforms programmes presented by the French government on Wednesday 13 April before submitting them to the European Commission at the end of the month lay great emphasis on the continuity of the economic and budgetary policies practised.
The French finance minister Michel Sapin spoke of “continuity in our budgetary policy, with the cleansing of the public accounts at a pace which is compatible with the economic recovery”. Reassured by a reduction of the deficit in nominal terms which turned out better than anticipated in 2015 (-3.5% of GDP) (see EUROPE 11520), the French authorities are maintaining their trajectory for cleansing the public finances (-3.3% of GDP in 2016 and -2.7% in 2017) based on such things as healthy growth in 2016 (+1.5% of GDP) than in 2015 (+1.2%). They stress that the state deficit fell by half between 2010 and 2015, the social security budget fell threefold over the same period and the local authorities have returned to a budgetary balance for the first time since 2003.
The public expenditure to GDP ratio will continue its gradual drop (55.3% in 2015, 54.6% in 2016), as will the ratio of obligatory levies (44.5% in 2015, 44.2% in 2016), to the benefit of both businesses, via the competitiveness tax credit, and 12 million tax households. However, in order to stick to its economic objectives, which have been thwarted by virtually zero inflation (0.1% in 2016), Paris has announced €3.8 billion of additional cuts in 2016 and 5 billion for 2017. Furthermore, getting on top of public expenditure will not prevent the public debt from continuing its rise in 2016 (96.2% of GDP) and 2017 (96.5%), a year in which it may stabilise.
Sapin also stressed the “continuity of our economic policy”. In 2016, French businesses will be able to consolidate their margins with the help of €34 billion in tax and social breaks. These margins will allow economic actors to invest more and ultimately to succeed, the French government hopes. Thanks to reductions on income tax, low-income households will benefit from a cumulative increase in purchasing power which has been put at €5 billion.
As regards reforms, Paris announced a new stage in the controversial reform of the employment market “to promote social dialogue and secure professional careers”, as well as new measures to simplify business life. (Original version in French by Mathieu Bion)