13 April 2018

Stability Programme 2018-2022: more optimistic forecasts than first expected

The Government presented its Stability Programme to the Council of Ministers on 11 April 2018; the document outlines the medium-term trajectory of France’s public finances and, as every year, is communicated to the European Commission.
More growth, less deficit: the Government has made an upward revision of its budgetary ambitions for the rest of the five-year term, with forecasts close to those made by the main national and international bodies.
  • Growth will be robust and high: after reaching 2% in 2017, the Government is forecasting 2% in 2018 and 1.9% in 2019, growth that may be explained by a favourable international environment along with the transformations undertaken by the Government.
  • With a deficit brought down to 2.6% of the gross domestic product (GDP) in 2017, France is fulfilling its commitment to bringing the public deficit to below the 3-GDP-point threshold by the end of the five-year term. Such pace is compatible with implementation of structural reforms and ensuring a balanced government budget by 2022. There will be no supplementary government expenditure.
  • The goal is to reduce the debt that is undermining growth and impoverishing all French citizens. In order to achieve it, the Government is keeping on with its structural reforms, in particular with its “Action Publique 2022” reform of the State and civil service.
  • In compliance with the President of the Republic’s commitment, the compulsory contribution rate will fall from 45.4% to 45% of the GDP in 2018, with a further one-point drop by the end of the five-year term. Residence tax, for example, will be progressively abolished for everybody by 2022.
  • There is no money stashed away: as Gérald Darmanin explains, “Being able to redistribute is first of all conditional on reforming and getting our public accounts in order; [we] are not there yet”.