A deficit and an exploding debt and four corrective finance laws: the execution of the state budget was upset by the health crisis in 2020, notes the Court of Auditors on Tuesday, which is worried about a risk of increase spending over time.
The health crisis cost nearly 93 billion euros to the State budget in 2020 (excluding the scope of Social Security and communities), according to the assessment carried out by the Court of Auditors and published in its annual report on the execution of the state budget, published Tuesday. “Even if this figure is surrounded by a margin of uncertainty, it reflects the magnitude of the cost of the crisis and the measures taken by the State to respond to it”, underlines the financial court.
“A structural increase in spending”
Additional spending related to the crisis amounted to 49.7 billion euros, while revenue losses reached 37.3 billion euros, including 32.3 billion less tax revenue. We must also add 5.7 billion euros related to the deficit of special accounts (special allocation accounts, such as the management of State participations, etc.).
But in addition to the effect of the Covid-19 epidemic, the Court noted that expenditure not attributable to the crisis also increased by 6.7 billion euros in 2020, “ie a growth dynamic close to that of 2019 (+7.3 billion) and much higher than that of 2018 (+1.5 billion) ”. This reflects “a structural increase in spending”, underlines the institution, which is worried, “of a risk of” ratchet effect “” which would mean that state spending would remain “at a sustainably higher level. than before the crisis, thus weighing on the trajectory of public balance and debt ”. While gross domestic product (GDP) plunged 8.2% last year, the debt (115.7% of GDP) and the public deficit (9.2%) hit record highs in 2020.
Objective: bring the public deficit below 3% in 2027
The Court puts forward still strong uncertainties for 2021, on the duration of the support measures for households and businesses, and possible new spending, for example if the State must mobilize its guarantee granted on certain loans. Faced with these concerns, the Ministry of the Economy assures us that it will be of “great vigilance” so that “this crisis spending is not perpetuated, on the one hand, by targeting support mechanisms and, on the other hand, on the other hand, by ensuring the temporary nature of these measures, ”he wrote in his response to the Court attached to the report.
He also announced last week “significant efforts” to come on public spending, in order to bring the public deficit below 3% in 2027. His objective is to reduce the increase in spending to + 0.7% per year. year on average at this timeframe, against an average of 1% per year between 2017 and 2019, and + 1.4% per year during the 2010 decade. This trajectory could be the subject of an upcoming assessment by the Court of Auditors, which , at the request of the Prime Minister, is due in early May to submit a report on the outlook for public finances.