Under the influence of the theories developed by Keynes and after the decisions of the president Roosevelt to get out of the 1929 crisis, the budgetary policy became, before the monetary policy and the action of the central banks, an essential tool giving to the governments the means to restore the economic balances and to satisfy household and enterprise needs. The increase of the State investment expenditures had a positive impact on growth and employment. The taxes reductions on household, through the purchasing power increase and the consumption which was resulting from them were supporting demand. The charges reductions granted to enterprises allowed them to improving their supply thanks to the investments they could more easily finance. Whatever it favors demand or supply, the budgetary policy inscribed in the finances bills every year has been at the heart of the economic policy, whatever was the political nature of the leaders.
The government has presented at the end of September its finance bill for 2024 and it is discussed at the National Assembly. The lack of absolute majority makes likely the recourse to the 49-3 article of the French Constitution and its approval. The bill will be then submitted to the Senate with a final vote before the end of the year. The exercise is not only difficult due to political reasons. It is confronted with several contradictory exigences and it is yet expected it will satisfy all of them.
After the massive budget deficits and the increase of the public indebtedness, France must reassure financial markets and fulfill Brussels expectations which is close to reintroduce Maastricht Treaty rules which had been suspended during the Covid-19 crisis. The government has entered an undertaking of not increasing taxes and has fixed for itself objectives: the coming back to full employment in a European context of stagnation, and even of recession as for some countries including Germany, the reindustrialization and the achievement of the necessary investments to accomplish the energetic transition with the reduction of CO2 emissions. Public deficit and indebtedness rates reduction, no tax increase and more expenditures, how is it possible to do that in the same time?
The presentation of the finance bill is based on an economic forecast for 2024, whose realization is, by definition, aleatory, especially in an uncertain international environment. Adopted growth rate (+1.4%) and expected inflation (+2.5%) are optimistic hypothesis. We will soon have a first estimation of the 3rd quarter statistics but the already known figures regarding consumption, investment and foreign trade do not allow us to expecting a significant rebound. The 2024 acquired growth at the end of 2023 so will be low. Regarding inflation, the highest uncertainty is about the evolution of raw materials prices with notably oil and natural gas.
The small reduction of the forecast State deficit and public indebtedness rates (4.4% and 109.7%) compared to 2023 mainly comes from a high increase of the corporate taxes receipts (+10 billion) and from the extinction of the given supports to soften the consequences of the sanitary and energy crisis (22 billion). But nothing allows to being sure that after the war started against Israel, a new spiralling out of control of the fossil energies prices won’t necessitate an extension of the existing aids.
It must also be necessary to offset the increase of the public debt charge because the main factors which had allowed to stabilizing it, short term rates near zero and the refinancing of bonds carrying high interest rates and coming at maturity by new ones with lower rates, has disappeared. In front of all these factors which would force the State to moderate its expenditures, the government has chosen a promotion strategy which searches to convince, with figures as an argument, it will meet its objectives regarding enterprises competitiveness improvement, the country reindustrialization and the energetic transition. It announces, in order to convince, investments figures regarding programs whose achievement is sometimes far from being sure, which will be split during years and whose financing it frequently contributes very partly.
The split during four years of the suppression of the enterprises value-added contribution constitutes a first example. Regarding household, the lack of full compensation of the suppression of the local taxes in favor of local authorities has constrained these ones to increase other taxes as real estate ones or second homes.
The “green budget”, near 40 billion, is not constituted, as it could be thought by a set of new expenditures in favor of environment but is only an inventory of expenditures already inscribed in ministerial budgets which contribute to that objective. The aids systems in areas as diverse as the reindustrialization, the strategic autonomy or the homes renovation are accompanied with figures representing tens of billion for which the State commitments constitutes only a small share. Are added to these direct aids, which some times must be reimbursed, shares issued by star-ups and the banks financings to lead to an impressive investment volume which gives a very overestimated vision of the public action.
The case of the thermal isolation of homes is another example of the gap which separates announcements from the reality. It was expected to realize 200 000 renovations in 2022 and the theoretical amount of the aids appeared in the finance bill but only 67 000 were realized, compared with a number of homes which is above 30 million. The situation has all the chances to be repeated this year and in 2024, despite the generous announcements. Two factors explain this gap which once more illustrates the difference between finance bill announcements and the reality of the action.
The first one comes from the complexity of these aids, which frequently dissuades the potential benefactors to have recourse to them. The government thinks it is doubly the winner on political and financial fields. It succeeds to convince about the reality of its efforts in favor of the reduction of energy consumption and it avoids an increase of public expenditures which threatens the other commitments it has taken. The second reason is about the diversity of the situations the aids system doesn’t take into account. Individual houses or buildings, lessors or leaseholders, co-owners or buildings with a unique owner, are cases which necessitate adapted and efficient procedures. Which owner will start works whose main benefactors will be its leaseholders through a reduction of their energy bills?
The budgetary policy is the purpose of a double speech. On one side the State commits itself to a professional rigor in the public accounts management. In the same time, it proceeds to impressive financial announcements accompanied with large advertisement campaigns priding itself on its commitments to support the essential objectives it has fixed. But the quoted figures, and it is the whole art of the government promotion, do not correspond to public expenditures or are related to several years or are only objectives to reach and in any case definite achievements.
We so have passed along the years from the budgetary policy to the budgetary promotion policy which allows the State, along with priding itself on the rigor of its management, to claiming to prepare the future. Unfortunately, the results, whatever it is growth, foreign trade or energy savings, are not there. Action needs promotion but that one cannot substitute itself to action.