THE END OF MAGIC MONEY HAS A PRICE

THAT OF DISGUISED AUSTERITY WITH THE EFFECTS

 OF ANNOUNCEMENTS BY BRUNO LE MAIRE

Because for Matignon, time is running out: suspended during the Covid, European budgetary rules will apply again next year. And the sharp rise in interest rates is significantly increasing the debt burden, which could become the main item of State expenditure, in a context of slowing growth. "This economic context (...) comes to constrain our equation of public finances and increases the requirement (...) of reduction of expenditure", we explain to the cabinet of Bruno Le Maire.

The end of "whatever it takes"

The government therefore acts the end of "whatever the cost". The Minister of the Economy Bruno Le Maire took advantage this Monday, June 19, 2023 of the foundations of public finances to detail his roadmap for the coming months. Objective: to redress accounts degraded by successive crises. According to the minister, "at least 10 billion in savings" have been identified to restore public finances by 2027.

The slate to pay

After the exceptional expenditure linked to the Yellow Vests crisis, then to "whatever the cost" during the pandemic, the executive is seeking to clean up public finances and has set itself the objective of reducing the deficit to 2, 7% of gross domestic product (GDP) in 2027, below the 3% limit set by the European Union. For the time being, according to INSEE, French public debt reached nearly 2,950 billion euros at the end of 2022, amounting to 111.6% of GDP. As for the deficit, last year it stood at 4.7% of GDP. Figures that place France on the side of the worst European students,

But what levers for "at least 10 billion euros in savings" to allow the recovery of France's public accounts by 2027?

To get back on track, the government thus intends to reduce public spending to 53.5% of GDP in 2027, against 57.5% in 2022. It is counting on the end of the energy shield, the gains from reforms such as pensions or unemployment insurance, full employment or even economic growth that he anticipates to be more dynamic, after a slowdown in 2023.

But also the opening of a project to limit sick leave by the fall, the reimbursement of "comfort or ease of health costs", the end of the Pinel device in housing and the recalibration of the loan device at zero rate - two measures already announced by the government which should allow overall savings of more than two billion euros in the long term, according to Bruno Le Maire.

Another measure adopted, the reduction in the cost of employment aid (learning, CPE, etc.) in the departments where unemployment is low and where there are tensions in certain trades.

In addition, the ministry has announced the end of tax benefits on fossil fuels (non-road agricultural and non-agricultural diesel, road transport), gradually spread over 4 years.

" It's time to get back to normal"

After the massive aid deployed in the face of the health and energy crises, "it is time to return to normal. But that does not mean austerity", justified Bruno Le Maire in Le Journal du Dimanche at the beginning of June.

This is not an austerity programme, the Prime Minister also hammered home during her closing speech at the general assembly of public finances this afternoon, while announcing… exactly the opposite. “Neither a tax increase, nor a planing stroke”, reminded Élisabeth Borne, who explained on several occasions that austerity was “counterproductive”.

But between refusal to increase taxes and social tension, with purchasing power at the center of concerns in the face of high inflation, the room for maneuver is narrow, say economists.

And government hypocrisy is at its peak !