French ministry of Finance building
25 March 2020

INSEE confirms the Government’s prudent stance regarding the budget

The 2019 accounts published today, 25 March, by the National Institute of Statistics and Economic Studies (INSEE) demonstrate the sound control over Government finances, with results that are slightly better than the most recent forecasts.

The Government deficit is -3.0% of gross domestic product (GDP) (as opposed to -3.1% in the most recent forecasts of the amending finance bill for 2019). For the third year in a row, the limit of 3% of GDP will not be exceeded, despite the temporary effect of the replacement of the competitiveness and employment tax credit (CICE) with lower social security contributions, which represented an expenditure of around 0.8 GDP points in 2019.

The aggregate tax and social security contribution rate is continuing to fall, reaching 44.1% of GDP in 2019, versus 45.1% in 2017. This is tangible evidence of the Government’s pledges to cut taxes.

As anticipated during the publication of Q3 figures, the 2019 debt ratio has fallen well below 100% of GDP, to 98.1% of GDP.

These results confirm the Government’s prudent budgetary stance since the beginning of the presidential five-year term, and the robust principles underpinning the French economy prior to the crisis. They show that France is a reliable authority for borrowing in the current circumstances.

These slightly better results give France a little more flexibility in financing the emergency measures set up to address the health crisis. This change in our fiscal policy, in consultation with all of the European partners, will come within the context of the flexibilities recognised by the European Union in response to the exceptional circumstances of the COVID-19 epidemic.