France’s budget deficit will drop to € 220 billion in 2021

The state budget deficit will amount to “about 220 billion euros” in 2021, against 173.3 billion provided for in the initial finance law (LFI), said the Minister of Public Accounts Olivier Dussopt on Saturday.

This worsening of nearly 47 billion in the budget deficit is “the consequence of the support measures that we continue to take to best support the recovery” to get out of the Covid-19 health crisis, according to the minister. On June 2, the government is due to present an amending finance bill (PLFR) comprising 15 billion euros of additional emergency measures, which will be used in particular to finance partial activity and targeted aid for companies in difficulty, had detailed Olivier Dussopt and the Minister of the Economy Bruno Le Maire in an interview with Echos Thursday.

Growth was ultimately not at the rendezvous in the first quarter in France, according to figures released by INSEE on Friday, with a decline in gross domestic product (GDP) of 0.1%, while a first assessment had reported growth of 0.4%.

On June 2, the government is due to present an amending finance bill (PLFR) comprising 15 billion euros of additional emergency measures, which will be used in particular to finance partial activity and targeted aid for companies in difficulty, had detailed Olivier Dussopt and the Minister of the Economy Bruno Le Maire in an interview with Les Echos on Thursday. New aid measures for companies in very great difficulty or tax relief for companies must also be presented on the occasion of the PLFR.

“We were far-sighted”

Faced with this setback, the government continues to bank on a strong acceleration in activity in the second half of the year and maintains its growth objective at 5% for 2021. But the new spending will lead it to borrow more in a context of rising prices. interest rate, currently between 0.2% and 0.3%, while it could still get into debt at negative rates last year, which will increase the debt bill. “We were far-sighted when drafting the finance law for 2021. Some had criticized us for being too cautious in terms of rates. The movement (upward in rates) that we know today shows that we were right, ”nevertheless assured Europe 1 Olivier Dussopt.

The path of reduction in state spending desired by Emmanuel Macron at the start of the five-year term is in any case put on hold. Bercy had initially planned to reduce the state deficit to 173.3 billion euros in 2021, against 182 billion in 2020, a year marked by a sudden collapse in activity in the spring, during the first confinement. The Covid-19 crisis has already more than doubled in 2020 the state deficit compared to 2019 (85.7 billion), a year itself marked by an unforeseen increase in spending linked to the social crisis of yellow vests, after a year of deficit contained to 66 billion in 2018.

The public deficit, which includes in addition to the State budget deficit that of Social Security and local communities, was initially forecast at 8.5% of GDP for 2021, but had already been revised upwards to 9 %, At the beginning of April. Thursday, Bruno Le Maire warned that this figure would be even higher, but Bercy was not yet able to provide precise figures on Saturday. The widening public deficit should finally further widen the public debt, which soared last year to 115.7% of GDP. The Minister of the Economy in April forecast an increase to 118% for this year.

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