Hélène Baudchon: "It is not the deficit that is worrying but the economic situation"

France's public deficit in 2020 will be “ no doubt ” higher than 3.9%, recognized the Minister of Public Accounts, Gérald Darmanin, this Sunday on Europe 1. The law which confirms this figure had however been voted on the same day ... Hélène Baudchon, France economist at BNP Paribas expects a 6.2% deficit.

LE FIGARO.- The government expects in its amending finance law for 2020 a budget deficit of around 3.9%. Does this seem credible to you?

Hélène BAUDCHON.- This forecast forms a whole, consistent with the other hypotheses adopted by the government. He expects, on the one hand, a confinement limited to one month which would be responsible for a contraction of the Gross Domestic Product (GDP) of 1% and, on the other hand, the fact that taxes and social charges, carried over today will be paid well later to the Treasury. In its amending finance bill, the government thus includes, in exceptional measures, only 11.5 billion out of the 45 billion in the support plan. These are the hypotheses that we can question. How long will containment last? What will be its impact on the economy? How many companies will go bankrupt? All these questions are open. Answering them today is very complex. For our part, we forecast a 3.1% drop in GDP for the year. And under the high assumption that all of the 45 billion announced weighs on the public deficit, it would reach 6.2% in 2020.

What will weigh most on the state: additional spending or lack of revenue?

In the government's scenario as in ours, it is the deterioration of the economic situation (and therefore of the cyclical component of the budget deficit) which has the most negative effect. Compared to the initial forecast of 2.2% deficit, in the government scenario, the contraction of activity contributes 1.4 points to the 1.7 point widening of the deficit and the support plan to the tune 0.3 point. In our more negative scenario, these same contributions are 2.2 points and 1.8 points, respectively, for a 4 point deterioration of the deficit.

Should we be alarmed that France's deficit exceeds 6% in 2020?

No, the priority today goes to the health situation. We are facing a massive recessionary shock and it is normal for the State to respond to it with budgetary measures that deepen the deficit. It is not the deficit that is worrying but the underlying economic situation.