Having secured an extra two years - an extension from 2015 to 2017 - to consolidate the French public finances, the Socialist government intends to leave its house in order when the five-year term in office of French President François Hollande comes to an end: public deficit will fall from 3.4% of GDP in 2016 to 2.85 in 2017.
“In 2017, the improved public finances dynamic will continue and the deficit will fall back below 3% of GDP, allowing France to come out of the excessive deficit procedure it has been in since 2009”, states the French stability programme for 2017-2020 unveiled by the French Finance Minister, Michel Sapin, and the Secretary of State for the Budget, Christian Eckert, at the Assemblée Nationale on Wednesday 12 April (our translation).
To meet this target, efforts to improve the public finances will be reinforced by additional measures worth €3.4 billion, including: €1.7 billion in state spending cuts, €900 million in local spending cuts and an additional €500 million generated by reducing the costs of servicing government debt. This, furthermore, is expected to stabilise, standing at the same level in 2017 as in the previous year, 96.0% of GDP.
Eckert stressed that over the last five years, there had been a real break between the average pace in the development of public expenditure - not including tax credits - which grew by +1.2% a year, compared to a rhythm of more than +3.2% over the previous five-year period. He went on to say that getting on top of spending in this way had not prevented them from funding France's national priorities: the security of the citizens, jobs and education.
In Paris, the European commissioner for Economic and Financial Affairs, Pierre Moscovici, spoke of a French government deficit equivalent to 2.9% of GDP. He told the LCP French television network that there was no glory or pride in the fact that France is the only Eurozone country under an excessive deficit procedure in 2018.
After a 2016 punctuated by a number of exceptional events such as terrorist attacks, activity is expected to pick up this year, with the French government forecasting growth of national GDP of +1.5% in 2017 and in 2018. (Original version in French by Mathieu Bion)