THE ” whatever it costs » is well and truly finished. To reduce France’s heavy debt, the government will present at the end of September a budget for 2024 which identifies 16 billion euros in savings, against a backdrop of less dynamic growth than hoped.
Indeed, the draft budget, presented on September 27 to the Council of Ministers, is affected by a gloomy economic environment which led the executive to revise its growth forecast downward to 1.4%, compared to 1.6%. of gross domestic product for next year.
“In 2024, growth will continue to progress”, after 1% forecast for 2023, declared the Minister of Economy and Finance, Bruno Le Maire, to journalists. And to continue: “It will be driven by our manufacturing production, by the definitive end to the inflationary crisis and by the resumption of consumption.”
On Thursday, the European Central Bank raised its reference interest rate once again, to its all-time high, a move aimed at fighting inflation but which increases the cost of debt for France. The cost of this, estimated at 38.6 billion for 2023, should reach 48.1 billion next year and up to 74.4 billion in 2027.
In this more difficult context, and as the verdict approaches in October of rating agencies Fitch and Moody’s on French financial health, the government intends to provide guarantees of budgetary seriousness. According to Le Maire, the public deficit should go from 4.8% of GDP in 2022 to 4.4% in 2024 then 2.7% at the end of the five-year term, below the European objective of 3%.
“This acceleration of debt reduction is fundamental at a time when all our European partners are committed to this path,” he erts. No more billions of euros spent at will to support households and businesses in the face of the pandemic.
End of the tariff shield
The government plans to make 16 billion in savings next year, most of which will come from the gradual elimination of the tariff shield for electricity, which made it possible to contain the invoices. The equivalent of 10 billion euros. To this will be added reductions in aid to businesses (4.5 billion) and to employment policy (1 billion) as well as 700 million from the unemployment insurance reform.
To bring money into the state coffers, the government is refining “taxation of surplus profits » of motorway concession companies and intends to increase the excise on gas (a tax), “without impact on the consumer”, underlined Bruno Le Maire. He also questions the “high” margins in refining, of which TotalEnergies is number one in France.
The minister is also counting on the fight against fraud (1.5 billion per year by 2027) and the introduction of the minimum corporate tax (1.5 billion from 2026). The CVAE, a production tax weighing on businesses, will be eliminated to the tune of 1 billion next year.
7 billion for the energy transition
This tightening of the screw does not, however, call into question, according to the minister, the government’s strategy of reducing taxation for businesses and households, at the heart of its policy since 2017. Households will see the income tax scale increased by 4.8%, but they will have to wait until 2025 to see the promise of a 2 billion tax reduction materialize.
At the same time, the government also boasts a green-tinged budget: 7 billion euros will be devoted to the energy transition. Brown tax loopholes (favorable to fossil fuels) will be eliminated, such as the one which reduced taxes on non-road diesel. “All brown tax revenues, to the nearest euro, will go towards the ecological transition and the greening of our economy,” said the minister.