Opinion n°HCFP-2023-1 on the draft amending social security financing bill

The High Council of Public Finances adopted the following opinion on the draft amending social security financing bill for 2023 after deliberating during its meeting of 16 January 2023.

Opinion's summary

The Government has referred to the High Council for Public Finance the draft amending social security financing bill (PLFRSS) for 2023 concerning the pension reform.

The High Council notes the narrow scope of the referral. It is able to analyse the consequences of the pension reform project on public finances in 2023. With a net cost of around €0.4bn, they are not significant. Given the incomplete nature of the information provided by the Government, the High Council is not in a position to assess the medium-term impact of the pension reform on public finances.

Moreover, the High Council notes that the lack of adoption of the public finance programming bill does not allow it to verify the consistency of the public finance forecasts of the financial texts with the programming law. Beyond, this absence, which goes against France's European commitments, deprives public finances of a compass that is essential to their sound management and to the preservation of public debt sustainability.

The High Council notes that the Government has changed neither its macroeconomic scenario nor its public deficit forecast for 2023 since the 2023 Budget Bill adopted by the Council of Ministers on 26 September 2022.

The High Council considers that the growth forecast associated with the PLFRSS (+1.0%) remains high. While it is, according to the Government, justified by the resilience of the French economy in the third quarter of 2022 and by carry-over effect for 2023, it is still above the available estimates. Conversely, the inflation forecast (+4.2%) is slightly low, as is the wage bill forecast (+5.0%).

In its opinion of 26 September 2022, the High Council considered that the 2023 public balance could be lower than forecast by the Government (5.0 points of GDP). This risk, associated in particular with lower growth, is now counterbalanced by the recent fall in wholesale gas and electricity prices. If confirmed, this could reduce the net cost of schemes designed to cushion the impact of higher energy prices on households and firms.

According to the Government, the public debt ratio would decrease slightly in 2023 (111.2 points of GDP after 111.6 in 2022), mainly thanks to the mobilisation of the excess cash accumulated at the end of 2022.

The High Council points out that the return to debt levels guaranteeing France sufficient fiscal space is required to be able to cope with macroeconomic or financial shocks and public investment need, in particular concerning climate change issues. The pension reform presented in this PLFRSS is not sufficient, on its own, to achieve such an objective. The medium-term sustainability of public finances will continue to require the utmost vigilance.