Yes, it is a “shield budget” that the government is presenting today. A shield against energy prices: 45,000 million euros gross and 16,000 million net.
A shield to protect French income with the indexation of the personal income tax scale to inflation: 6,200 million euros.
And then a shield also for social benefits in the social security budget with a new revaluation of pensions, family allowances and RSA.
For the second year in a row, the government is choosing to spend heavily to cushion the impact of inflation and the poor international economy.
This economic policy worked this year with growth that remains high despite all the headwinds: it will be 2.7%.
But next year, the ambition is no longer the same: barely 1% growth and the budget shield has a mission, which is to avoid recession.
Debt Burden Explosion
Bercy also hopes to avoid runaway deficits and public debt because money is getting more expensive again and Bercy has no “anti-inflation” or “anti-rate” shield.
It bears the brunt of the rise in prices and the normalization of monetary policy. Consequently, with debt soon to exceed €3 trillion, the debt burden will cost €51.7 trillion next year.
And that has very concrete consequences for the budget. It is for example due to this debt burden that the CVAE will be abolished in two years and that there will be no reduction in inheritance tax.
But given the return of tensions in public finances, the Government does not foresee massive savings in spending either.
This budget is also a shield for all the ministries, they all go up next year: ecology, employment, defense, education, health… Public spending will increase by a total of 21,700 million euros.
And the result is that this “budget shield” will be too heavy for public accounts to improve next year. The deficit will remain at 5% and the debt at 111% of GDP like this year…
Source: BFM TV
