Budget 2023: Protect without widening the deficit, the government’s narrow path
Curb inflation protection and government deficits: the way is narrow for the 2023 budget draft, which the government will present on Monday without an absolute majority in the National Assembly.
If it does not find enough allies on the opposition benches, which seems unlikely, the Executive must decide to force passage without a vote, using Article 49-3 of the Constitution.
Aware of the risk, he has multiplied gestures of goodwill towards opposition MPs and expressed a desire for consultations, notably through the “Bercy Dialogues”. These preceded the finalization of the finance law, which will be presented to the Council of Ministers for the first time on Monday.
After three years of extraordinary spending related to the health crisis, which pushed up the debt, the momentum of recovery, already slowed down by supply problems since last autumn, was interrupted by the energy crisis caused by the war in Ukraine and the inflation achieved Values not seen for more than 35 years.
If the government doesn’t reactivate “at all costs”, they want to continue to protect individuals and companies from rising energy prices.
The “tariff umbrella” alone, intended to limit the increase in gas and electricity tariffs to 15%, costs public budgets 16 billion euros, after the contribution of renewable energy producers, who have become very profitable thanks to the increase in kilowatt-hour prices.
“We will have a hard time getting used to all these support measures in terms of gas, electricity and fuel prices,” François Ecalle told AFP. As a former reporter on the state of public finances and author of the Fipeco blog, he advocates support measures reserved for households in difficulty, such as the energy check, in order not to encourage fossil fuel consumption.
– debt burden –
Despite a bleak economic outlook with expected growth of no more than 1% in 2023 and recession risks pointed out by the Banque de France and many economists, the government intends to limit the public deficit to 5% of gross domestic product (GDP). , before being brought back below 3% of the European criteria by 2027.
For Economy Minister Bruno Le Maire, “this is the condition for the credibility of the development of our public finances for the entire five-year period”.
Next year’s budget is set to increase from €21.7 billion to €346.5 billion, according to a Bercy Dialogues document obtained by AFP from a parliamentary source.
Expenditure on the Work and Employment mission would increase by €6.7 billion, driven in particular by efforts to support learning, while the Ecology, Sustainable Development and Mobility position would increase by €6.6 billion.
But spending expected to rise the most is debt burdens, which rose by 17 billion euros from 2021 to 57.6 billion euros, just behind schooling at 60.2 billion, according to spending ceilings reviewed by the Treasury in August. The issue is at the center of concern as the interest rate on France‘s 10-year loan hit a record high since January 2014 at more than 2.5% on Tuesday.
– Tax super profits –
To save money, the government has decided to spread over two years the abolition of the Corporate Value Added Contribution (CVAE), a production tax that employers expect to be phased out from 2023. This distribution allows her to save 4 billion euros over the next year.
However, some municipalities fear that they will not receive sufficient compensation for this loss of tax revenue. And more generally, local authorities are asking for financial support to cope with rising energy prices or the reassessment of civil servants’ salaries.
For the opposition parties, beyond the taxation of the “super profits” of companies, an additional resource must be found beyond the energy sector, for which a measure is being examined at European level.
At Nupes, “we think it’s unconstitutional to touch a single sector,” says LFI President of the Assembly Finance Committee, Eric Coquerel. The links alliance is therefore working on “sales thresholds” that would not allow multinationals like Total to evade tax by not declaring profits in France.
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