Budget 2023: Bercy struggles to convince about his effort to control public spending

Posted on September 26, 2022 at 15:16

Finished and well finished? When presenting the finance bill for next year, Bruno Le Maire assured this Monday that “we are leaving ‘whatever it takes’, and it is not to return.” However, it will take some time for the Minister of the Economy to be convinced that the page has indeed been turned, as evidenced by the unconvinced opinion issued on the same day by the Superior Council of Public Finances (HCFP) on the trajectory shown by the public in Bercy. expense within five years.

Despite the billions of euros thrown over the next year to cushion the blows of inflation, the government vows not to let spending slip away. “It’s not an easy budget,” hammered Bruno Le Maire. The executive highlights that spending would show a 1.5% drop in volume (excluding the effect of inflation next year). But this trend is mainly explained by the end of certain exceptional aid linked to the health and energy crises. Neutralizing its impact, the HCFP -an independent institution attached to the Court of Auditors- calculates that the evolution is rather +0.7% in volume.

membership growth

It must be said that the multiple priorities of Macron’s second five-year term (school, health, employment, justice, interior, defense) translate into 24,000 million additional credits for the ministries. A sign that the time was not in trouble, the government announced that it intended to create 10,764 public jobs within the State and its operators, a trend seen more since 2016 and the years of the Netherlands. The growth of Ondam (national goal for spending on health insurance) “still remains higher than before the health crisis”, also notes the HCFP.

Of course, the executive can always rightly argue that most European countries have also thrown the budgetary floodgates wide open to deal with the inflationary shock. And, above all, it tones the muscles by assuring that the effort in public spending will be “constant, credible and solid” during the five-year period, with growth in volume (without inflation) limited to 0.6% in five years (for siding with of emergency and recovery measures). “Lowest spending increase in twenty-five years,” drums Bruno Le Maire.

expensive debt

Realistic? For the HCFP, such a trajectory is “ambitious” – the diplomatic path chosen by budget savants to say they are dubious to say the least, while “the effort to rein in spending is only partially documented”. To achieve this, the local authorities would have to accept the new mechanism for limiting their operating costs (-0.5% in annual volume) that the Government wants to implement. It would also be necessary to increase spending on health insurance less rapidly than GDP, “something that has rarely happened in the past,” recalls the HCFP, and while the country will have to manage the aging of its population.

Finally, for the State, this imposes a decrease of -0.7% in annual volume in spending between now and 2027, which seems anything but obvious in view of the numerous increases in appropriations (defense, interior, investigation, justice , education) already recorded. The government also has a goal of staff stability over the five-year period that is difficult to achieve given the many new hires awarded in 2023.

The difficulty in controlling spending will also come from the fact that public administrations will have to learn to live with an interest burden that is permanently higher than that of the previous five years. This should stand at 51.7 billion in 2023, almost the same level as this year marked by a sharp increase. Over the five-year period, this burden should see its weight increase slightly, from 1.8% of GDP in 2022 to 2.1% in 2027.

Leave a Comment

Your email address will not be published. Required fields are marked *