
The public finance arena sees the French government displaying unwavering optimism with its new plan aimed at bringing the public deficit below the threshold of 3% of GDP by 2027. However, this same optimism does not resonate within the High Public Finance Council (HCFP), which expresses serious doubts about the feasibility and credibility of this program. This gap in perception raises an essential question: is the government's plan wishful thinking or a pragmatic strategy?
High ambitions in the face of harsh criticism
The government, under the leadership of its economic ministers, has outlined a path for progressive reduction of the public deficit, aiming for a reduction from 5.5% in 2023 to 2.9% in 2027.
Each year should see significant improvement, supported by ambitious structural reforms and rigorous control of public spending.
Government spokesperson Prisca Thevenot maintains that this plan is not only necessary but also realistic, citing ongoing efforts at reindustrialization and investment in public services.
However, as reported The gallery, the High Council of Public Finances is not convinced. He criticizes the lack of “credibility” and “coherence” of the plan, pointing out growth forecasts considered too optimistic and a lack of detailed documentation on the exact measures which will make it possible to achieve these objectives.
Furthermore, the HCFP warns that the necessary structural adjustment could have a negative impact on economic activity in the short term.
The reality of the numbers: a major challenge
The figures speak for themselves: reducing the deficit by more than two percentage points in four years is a historic challenge, especially in a context where economic growth may not reach expected levels.
The HCFP believes that the GDP trajectory is overestimated, implying that the government may have to revise its forecast downwards, thus making the deficit target even more difficult to achieve.
The government is banking on deep structural reforms and substantial savings in spending, planning to make 40 billion euros in savings between 2024 and 2025.
However, implementing such cuts will require seamless buy-in and coordination between state, local government and Social Security – a synchronization that the HCFP says is not yet established.
The French government remains firm in its desire to “stay the course”, arguing that its program is essential for a “fairer, stronger” France.
However, the shadow of skepticism looms large, posed by experts who fear the promises will not be kept.
So, is this deficit reduction plan a risky bet or a strategic necessity? Time will reveal the answer, but one thing is certain: the balance between economic growth and fiscal discipline will be crucial to the success or failure of this bold undertaking. Meanwhile, 300 billion from Russia could be seized.
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