State Budget: “A more structural reflection on public revenue and expenditure is becoming urgent”

The €44 billion deficit reduction plan presented by the Prime Minister on Tuesday, July 15, is both an economic and political issue, like any public budget. France's current situation is such that this budget must be considered as part of a broader effort to restore public finances.

Indeed, François Bayrou's plan, already unprecedented in its size, represents only about a quarter of the adjustment required to halt the rise in debt. As much as the current measures, which must of course be debated, it is the future steps that must be outlined despite the shortening horizon of political debate.

The profusion of figures can be dizzying. First, estimates converge: the deficit would need to be reduced by around €110 billion to sustainably stabilize the public debt. Of the €44 billion announced by François Bayrou, a portion is simply aimed at preventing the deficit from rising above its current level. As a result, the deficit reduction effort is actually estimated at €27 billion, or about a quarter of the total effort needed to stabilize the debt.

This consolidation will not necessarily result in a decline in purchasing power, but rather in slower growth. According to our forecasts, real growth will be 1.1% in 2026. The 27 billion effort thus represents four-fifths of the expected increase in national income that year.

That said, this overall estimate says nothing about the fair distribution of the effort. The public debate pits different conceptions of tax justice against each other: should high incomes, shareholders, wealth holders, or even retirees contribute more? Added to these questions is a technical difficulty: there is no single tax instrument that allows for a fair distribution. Only a combination of tools—cutting spending, increasing revenue—can produce a sustainable trajectory.

You have 66.65% of this article left to read. The rest is reserved for subscribers.