The 2nd confinement decided by the President of the Republic as of October 29 triggered a fourth corrective finance law for 2020 (a record!) In order to further degrade the GDP in the budget forecasts and to vote for emergency measures to help poor businesses once again under administrative closures (non-essential shops, restaurants, bars, theaters, cinemas, etc.).
The result on public finances was not long in coming.
The figures are chilling: -11% growth, inflation now zero, public debt which is skyrocketing from 117.5% for 2020 in September to 119.8% of GDP.
A public deficit of -11.3%.
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The measures of the emergency plan go from a budgetary cost for 2020 of 64.5 billion euros to 85.5 billion euros The aid paid (solidarity fund) increases by almost 10.9 billion euros .
The extension of the partial unemployment benefit schemes has an additional cost of 3.2 billion euros shared two thirds by the State, bringing the total support for partial activity to 34 billion euros. euros.
High Council of Public Finances
Under these conditions, public spending will increase further in 2020 to 1,434 billion.
They will reach nearly 64.3% of GDP (excluding tax credits) and 65.1% (including tax credits).
Revenue should hold up well and would only decline by 2.1 billion compared to the September 2020 forecast, (with losses of between -358 and -583 million euros, for compulsory levies at 45, 2% of GDP (excluding tax credits) and 46.3% of GDP (including).
The budget deficit to be financed for 2020 will be 222.9 billion euros.
This figure must be added to the refinancing of the debt matured of 136 billion euros.
Note: a significant drop in additional short-term funding (from 82.9 billion expected this summer to only 53.3 billion euros).
This is explained by an increase in “other cash resources” of around +11.8 billion, mainly the effect of issue premiums net of discounts thanks to the issue of debts on old strains with interest rates. higher interest than today ...
The High Council of Public Finances once again underlined the fanciful nature of the level of the structural balance and the absence of a credible and updated trajectory for the return to balance of our public finances and for deleveraging.
As long as the Banque de France redeems French debt without limit on the secondary market, the State recovers in dividends more or less what it pays it in interest charges.
A cycle of addiction to public spending which should increasingly complicate any normalization of monetary and budgetary policies.
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