The government’s long-term debt and deficit reduction project is based on overly optimistic economic forecasts and lacks ambition compared to other countries in the European Union, judges the Higher Council of Public Finances (HCFP) in a statement published on Monday.
As part of the preparation of its budget for 2024, which will be presented on Wednesday, the Government lowered its growth forecast for next year to 1.4%, compared to the 1.6% previously forecast, but generally maintained changes its growth forecasts for 2027.
“Optimistic” projections
The HCFP considers “optimistic” the Government’s forecast of a potential growth of 1.35% on average annually during the period 2023-2027. And the growth forecast for 2024, even lowered, is still higher than the consensus of economists (+0.8%), notes the HCFP, “especially because it assumes that the tightening of credit conditions has already produced the essential of its effects.”
Likewise, the HCFP is optimistic about the Government’s plan to reduce the public deficit to 2.7% of the gross domestic product (GDP) in 2027, “while the weight of the interest burden increases considerably and the percentage of mandatory deductions remains almost identical.
France has foreseen a slow return towards the 3% of GDP ceiling set by the European Union in relation to the public deficit and the HCFP considers this trajectory “unambitious in view of France’s European commitments”.
“While growth assumptions remain optimistic, the modest inflection in the debt trajectory exposes the risk of further divergence with the rest of the euro area,” notes the HCFP.
Source: BFM TV
