Opinion on the end-of-year budget bill for 2023

On 20 October 2023, the Government referred to the High Council of Public Finance the matter of issuing an opinion on the macroeconomic forecasts associated with the 2023 end-of-year budget bill (PLFFG), on the realism of revenue and expenditure forecasts and on the consistency of this bill with the multiannual structural balance path.

Opinion's summary

The Government has not changed its macroeconomic scenario for 2023 from the one associated with the 2024 budget bill (PLF). The High Council considers that the Government's growth forecast for 2023 (+1.0%) is achievable, in an economic context that is nonetheless darkening. The inflation forecast (+4.9%) is still considered as plausible. However, the wage bill growth forecast in the non-agricultural market sector (+6.5%) now seems a little high given its slowdown over the summer.

The High Council considers that the Government's forecast of a general government balance for 2023 of -4.9 percentage points of GDP, also unchanged from the estimate associated with the PLF for 2024, is plausible. The remaining risks for the end of the year, in terms of both expenditure and revenue forecasts, appear to be relatively balanced.

According to the Government, the structural balance will be -4.1 percentage points of potential GDP in 2023, after -4.2 percentage points in 2022, representing a very modest structural adjustment of 0.1 percentage point of potential GDP. The level of the structural balance in 2023, identical to the one presented by the Government in the public finance programming bill (PLPFP) 2023-2027 revised in September 2023, remains very far from the medium-term objective for the structural balance (-0.4 percentage point of potential GDP), and the nominal deficit would exceed 3 percentage points of GDP, whereas the European Commission has announced that it intends to deactivate the general escape clause of the Stability Pact at the end of 2023.

The public debt-to-GDP ratio would fall by 2 percentage points in 2023, benefiting at its denominator from significant GDP growth in value terms, mainly due to high inflation. The High Council notes, however, that France would continue to see its debt position eroding within the eurozone, with the fall in the public debt ratio being faster in many eurozone countries, including some of the most indebted (such as Spain and Portugal). The High Council points out that the return to debt levels enabling France sufficient fiscal space is required to be able to cope with future macroeconomic or financial shocks, and with the public investment needs required in particular by the ecological transition.