Budget 2023: the executive opens the floodgates of public spending a little more

Posted Sep 22, 2022, 7:00 AM

Bruno Le Maire said it again last week, “the ‘whatever the cost’ is behind us”. However, the government’s latest forecasts for its Finance Bill (PLF) for 2023 show a further increase in public spending compared to the already generous announcements made this summer, financed in part by revenue – in particular receipts from social security contributions – more generous than expected.

Bercy now provides for an increase in state budget appropriations (excluding debt charges) of 21.7 billion next year compared to 2022, for a total of 346.5 billion euros. This is what emerges from the documents provided to parliamentarians during the “Dialogues de Bercy”, of which “Les Echos” was able to obtain a copy. Compared to the copy presented last August, this represents a spending surplus of 7.5 billion.

No austerity

Clearly, the budgetary normalization promised by the Minister of Economy and Finance will take some time. State loans would thus be up by 6.6% compared to the level of the PLF 2022, i.e. a higher rate than that expected from inflation (4.2%).

Before the Association of Economist and Financial Journalists on Monday, the general rapporteur of the Budget at the National Assembly, Jean-René Cazeneuve (Renaissance), had recognized that “it is not a budget of rigor or austerity”. “This reflects our desire to ensure our priorities which are certainly numerous but meet the needs of the French,” he added.

Gargantuan new tariff shield

In detail, this additional increase of 7.5 billion stems in particular from credits added (4.7 billion) since August to those of the Ministry of Ecology. This must be seen as a consequence of the gargantuan new tariff shield against rising gas and electricity prices – with a gross cost of 45 billion euros – announced last week.

Bercy had anticipated for a long time that it would be necessary to act again on this file and provisioned significant sums from August, but must therefore return to the pot to take into account the surge in energy prices which has continued since.

In total, the credits of the Ministry of Ecology are announced up by 6.6 billion compared to that of the PLF 2022. They should in particular finance the acceleration of the MaPrimeRénov’ system or the green fund for the territories (1, 5 billion) announced during the summer by Elisabeth Borne, the Prime Minister.

Tax revenue

The other explanation for this new surge in public spending comes from the Ministry of Health, which sees its envelope (different from all the sums allocated to Health Insurance via the Social Security budget) inflate by 2 billion euros compared to the latest figures put forward during the summer. We must see the effects of European funds used to supply the investment component of the Ségur de la santé decided two years ago. Finally, the envelope of undistributed appropriations is also increased by 800 million.

Faced with these rising expenses, Bercy can count on better-than-expected revenues to somehow maintain its budget balances (with a deficit announced at -5% of GDP next year). In total, it is therefore announced 38.5 billion euros of additional compulsory levies compared to the announcements of the summer. Half comes from the contribution imposed on producers of solar and wind energy, which will reach new heights. The new tempo spread over two years of the reduction in production taxes will also automatically raise the expected level of tax revenue.

Beyond that, despite the lowering of its growth forecast for next year, Bercy is nevertheless counting on higher revenue for several taxes. This is the case for corporation tax (+3 billion compared to the August forecast), income tax (+500 million) and even VAT (+2 billion).

But the main manna would come from the receipts of social security contributions and social security contributions, which should be higher by 9 billion euros compared to what was announced this summer. In total, compulsory levies are now expected at 1.234 billion euros next year.

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