The European Commission has published its analysis of macroeconomic imbalances within the Euro Area, as well as an initial analysis regarding public finances. The European Commission’s press release comes in the context of new European economic and fiscal governance procedures. It is a progress report in which the Commission explains its analysis of the EU member states’s economic and fiscal situation, building on its 25 February forecasts. As every year, each country’s specific situation will be discussed at European level in June, on the basis of the stability programme and the national reform programme which the government will present to Parliament in mid-April.
The Commission has confirmed the government’s growth forecasts, since its projections stand at 1% in 2014 and 1.7% in 2015. The European Commission nevertheless emphasizes the competitiveness challenges which the French economy still faces and considers that, in relation to its last forecasts, there are risks of the public deficit targets recommended by the Council being exceeded.
Regarding public finances, the Economy and Finance Minister and the Minister Delegate for the Budget recall that on 31 March, INSEE [National Institute of Statistics and Economic Studies] will publish a provisional estimate of the general government accounts for 2013. At this stage, only a partial picture of the total general government deficit for 2013 is available. This information shows that expenditure was kept strictly under control and that the structural deficit will continue to be sharply reduced. For the state, expenditure – including the debt and pensions burden – is €3.4 billion below the sum fixed in the initial budget law. Regarding health insurance expenditure, the latest information suggests that it is more than €1 billion below target. As for receipts, weak growth in France, in a context of recession in the Euro Area in 2012 and 2013, has prevented them from increasing spontaneously.
In total, the effort to reduce the structural deficit in 2013, deemed “considerable” by the Cour des Comptes [Auditor-General’s Department; Audit Court], is all the more noteworthy for having been accomplished in a context of deflation and recession in the Euro Area.
For 2014, the Commission’s forecast is still surrounded by many variables, beginning with the result of the 2013-2014 financial year and developments in the macroeconomic environment. The government is pursuing its strategy of rigorously controlling expenditure. It also has enhanced tools for coping with management risks: among other things, it has increased the “precautionary reserve” on the state budget, which stands at €7 billion in 2014.
The government is committed to pursuing, until the end of the five-year term, its effort to restore the public accounts to a sound footing, focusing all efforts on reducing public expenditure from 2015 onwards, with at least €50 billion in savings expected over the 2015-2017 period.
The government is also determined to continue its efforts to support the production supply in order to enable the French economy to return sustainably to stronger growth and more employment.
The Responsibility Pact announced by the President will extend the structural reforms encouraging competitiveness, growth and employment which were embarked on 22 months ago, taking an industrial dialogue approach: the competitiveness and employment tax credit, the job security act, the reform of pensions regimes, the reform of vocational training, the modernization of public policy, the consumer affairs act – which will improve consumers’ spending power – and support for innovation. Private investment and employment picked up at the end of 2013; the efforts begun should be continued and deepened./.