Potential growth is a key parameter in public finance programming, as it is the best forecast of GDP growth in the medium term, and therefore determines the intrinsic evolution of public revenues to be included in the associated scenario.
Its estimate over a medium-term horizon, such as that of the next public finance programming bill (LPFP), can take as a starting point the dynamics that would be deduced from the extension of the trends observed before the crisis for the factors of production. This “mechanical” forecast leads to a reference potential growth trajectory of around 0.8 % per year in the forecast.
Furthermore, the inclusion of the effects of policies to enhance job growth (CICE [competitiveness and employment tax credit], responsibility pact), which supported employment and growth but somewhat slowed productivity before the crisis, results in an increase in the potential growth forecast (+0.1 point).
Implementation of the pension reform announced by the President of the Republic during the presidential campaign could raise potential growth by 0.15 point per year over the next few years.
Other structural reforms, either coming into effect over the projection period or gaining momentum, would help support potential growth, but it is not possible to say whether this support would be stronger or weaker in the forecast than in previous years. Their effects therefore represent a contingency of indeterminate sign on the potential growth forecast.
All in all, these elements suggest a medium-term potential growth scenario close to 1 % per year, slightly more or less depending on the assumption made regarding the implementation of the pension reform announced during the presidential campaign. This scenario is affected by the substantial uncertainties surrounding the assessment of the underlying dynamics of the factors of production, and the effects of public policies on these factors, but which can play out both upwards and downwards.
Moreover, this potential growth scenario is surrounded by two major negative contingencies, which are difficult to quantify: firstly, the occurrence of a new crisis which, like the last few crises, would further reduce potential growth, cannot a priori be ruled out; secondly, the constraints affecting the French economy that can be identified today (the weight of public and private debt, the deterioration in the quality of workforce training, the scars of the crisis on the productive sector, the consequences of the ecological transition) could adversely affect potential growth, if the public policies put in place are not sufficient to correct them over the forecast horizon.
Conversely, the loss of labour productivity observed so far could, if it were to be at least partly reversed over the forecast horizon, push up potential growth.