The Court of Auditors draws a particularly dark picture in its annual report on the situation and outlook for public finances, published this Tuesday morning. Faced with the coronavirus crisis which has hit the French economy hard, “the shock to public finances is massive“And”exceptional“Insist the magistrates of the rue Cambon who thus confirm the very gloomy economic forecasts for this year. And, unlike other countries also affected by the pandemic, “France has not tackled this crisis with restored public finances“Also criticizes the institution chaired since early June by Pierre Moscovici, Minister of the Economy at the start of François Hollande’s five-year term before leaving for Brussels as European Commissioner for Finance.
Massive fall in revenue
Now well known, the figures speak for themselves: this year, growth should contract by 11% of GDP. Estimated at 50 billion euros before the crisis, the public deficit should explode at … 250 billion, which would weigh 11.4% of GDP. As for debt, it soars a little more and should exceed 120% of GDP. “In amount, it would represent the equivalent of almost 40,000 euros per French“, Considers it useful to specify the financial institution.
More specifically, it’s the fall “massive“Public revenue of around 135 billion euros which explains”two-thirds of deficit increase“Continues the Court of Auditors. For the rest, these losses result from the massive support of the government via its emergency plan of 130 billion euros, including 57 billion of dry expenses (partial unemployment or solidarity fund). And the addition should climb a little more with the stimulus plan planned for the start of the new school year in September and the few measures (youth employment …) not yet revealed.
“In total, faced with the emergency, the State played the role of “insurer of last resort” for the economy and income“, Underlines the Court of Auditors. And to add that “if for some the crisis has already had dramatic consequences, most of its economic cost has not yet been “paid”: it has been transferred to public debt ” whose sustainability is a “Central issue“
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The weight of public spending, the highest in Europe
However, unlike other countries like Germany, France has very little room to maneuver to face the worst recession since the end of the Second World War. Certainly, the previous financial and economic crisis of 2007 had already led to “a sharp deterioration in public accounts in France and with partners” But since then, the Hexagon has not taken advantage of the last years of economic recovery to restore its accounts which should reach … 63.6% of GDP this year, recently indicated the High Council of Public Finances. “The weight of public expenditure in relation to GDP, marginally reduced during periods of growth, is the highest among European countries“, Deplore the magistrates.
An inevitable recovery of accounts
The Court of Auditors therefore recommends action “credible»To restore public accounts by carrying out structural efforts without breaking growth over time. This recovery is all the more inevitable since even if growth starts again, a rebalancing “ spontaneous “Public accounts will remain”very partial “, Insists the Court of Auditors. In other words, the mere return of growth will not make it possible to reduce the deficit and control the debt.