The French government is counting in its finance bill for 2023 on growth of 1% next year, against 1.4% anticipated so far, Economy Minister Bruno le Maire told journalists on Tuesday. September 13.
On the other hand, the ministry is revising its inflation forecast upwards for 2022 (5.3% against 5% expected in July) and 2023 (4.2% against 3.2%), in a context of “continued war in Ukraine, tensions over energy prices and economic fragility” France’s main trading partners, namely the United States, Germany and China.
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Despite these headwinds, “France resists”, assured Bruno Le Maire. He welcomed expected growth of at least 2.5% for 2022.
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Despite the downward revision of growth for next year, “we will maintain the 5% public deficit in 2023”promised the Minister of the Economy. “This is the condition for the credibility of the trajectory of our public finances for the entire five-year term”which expects the deficit to fall back below the 3% of GDP threshold in 2027, he added.
Public debt should for its part decline to 111.5% of GDP in 2022 (against 112.5% in 2021) and 111.2% in 2023 according to Bercy, slightly below the debt levels expected so far.
The “maintained” tariff shield
Bruno Le Maire promised that despite “savings on public spending”the government would continue “to protect households and businesses in crisis situations”. Thereby “the tariff shield on [les prix du] gas and electricity will be maintained” with, however, price increases scheduled for January 1st. But these “will be contained”promised Bercy.
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Prime Minister Elisabeth Borne must specify the amount of these increases on Wednesday, during a press conference.
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Bruno Le Maire also reiterated that the contribution on the added value of companies (CVAE) would be abolished in two stages, up to 4 billion in 2023 and the same amount in 2024.
He also confirmed that pensions would be increased in early 2023.
No inheritance tax reform in the 2023 budget
To respect its budgetary trajectory, the government is counting in particular on corporate tax (IS) revenue of 55.2 billion euros in 2023, or 3 billion more than anticipated in July.
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To save four billion euros next year, Bercy has endorsed the spread over two years of the abolition of a production tax, the contribution on the added value of companies (CVAE). A decision freshly welcomed by the employers, even if Bruno Le Maire assured “always hold on” his word on lowering taxes.
For individuals, the reform of inheritance tax, Emmanuel Macron’s campaign promise, will not be undertaken as part of the 2023 budget.
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And despite “savings on public spending”the government will continue “to protect households and businesses in crisis situations”, promised Bruno Le Maire. A commitment made when inflation, measured at 5.8% over one year in August, should accelerate further until the end of 2022 or the beginning of 2023 to reach 6.5%, according to INSEE.
On the social aspect, the government wants to be reassuring: “the choice that was made” is that of a “indexing” pensions and social benefits “on the level of inflation”, we assure Bercy. The income tax brackets will also be increased by the level of the price increase.
