France: A 2023 budget facing moderate uncertainties

The French economy is approaching a new period of marked slowdown in growth, a situation that is likely to weigh on the trajectory of public finances. Thus, while the government has incorporated an assumption of 1% real growth and 4.6% nominal growth in GDP, our forecasts for 2023 indicate figures of 0 and 3.6% respectively. This difference could result in a deterioration in public finances in relation to what was incorporated into the draft budget bill for 2023. Chart 1 highlights a close relationship between two differentials: the gap between the assumption for nominal growth incorporated into the draft budget bill and the actual growth achieved, and the difference between the deficit targeted in the draft budget bill and the actual deficit resulting from budget implementation (the revised draft budget bill is used for 2022).

These elements suggest that a gap of 1 pp on growth would widen the public deficit by almost 10 billion euros, which in relation to GDP would result in a deficit of 5.4% of GDP at the end of budget implementation instead of 5% in the initial draft budget bill.

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