France’s finance and public accounts ministers have today (September 26) presented the government’s 2023 projet de loi de finances budget, with a particular focus on “pushing inflation down”.
Finance Minister Bruno Le Maire said during a press conference this afternoon that “no new spending” will be approved unless it has been “budgeted to the nearest euro.”
He added that “the French economy is holding up” in terms of growth, employment and business investment and that the state’s “absolute priority is to push inflation down.
“We do not want to increase taxes and we want to protect households.”
The government has said that it expects the economy to grow by 1% next year but the Organisation for Economic Cooperation and Development has suggested this morning that this figure may actually be 0.6%.
“I do not want to leave our compatriots in any doubt over our determination to re-stabilise French public finances, to return to a deficit below 3% by 2027 and to reduce public debt from 2026,” Mr Le Maire said.
He also announced that the 2023 budget represents a slight reduction in public spending, which will be made possible through reforms to pensions and unemployment cover. Next year, 56.7% of GDP will go into public spending, compared to 57.6% in 2022.
The budget announcement came alongside that of the projet de loi de financement de la Sécurité sociale and the projet de loi sur ‘l’accélération des énergies renouvelables’.
Funding for environmental projects
“The budget we are presenting today is one of protection,” Public Accounts Minister Gabriel Attal said.
He announced that €500million would be given to the Ma Prime Rénov’ eco-friendly renovation scheme, as well as €250million for promoting bicycle use and €1.5billion for local authorities’ environmental initiatives.
Read more: France confirms €250million investment in push bikes by 2023
‘Determination to accelerate the ecological transition’
“France still depends a little too much on fossil fuels,” Mr Le Maire said, adding that this has been borne out by the fact that the state is having to invest so much money into “protecting” the population from the price rises caused by the war in Ukraine.
The government announced earlier this month that regulated gas and electricity bills would be capped at a 15% rise in France in early 2023. Without this government intervention, the increase would sit around 120%.
Read more: Regulated French gas and electric bills capped at 15% rise in 2023
This will cost the state €45billion, with an additional €3billion needed to support businesses. However, levies on energy companies are expected to bring the real cost of this measure down to around €12billion.
“There is a lot of spending going into gas bills,” he said, adding that this “can only reinforce our determination to accelerate the ecological transition.”
Read more: President Macron opens France’s first offshore wind farm
More funding for healthcare
“The only spending which we will continue to increase is on healthcare,” Mr Attal said.
He added that the deficit in social security spending will fall in 2023 from €17.8billion to €6.8billion because of a reduction in the amount of funding needed for Covid-related care.
Read also: Travel and health coverage: How do I get French equivalent of Ehic?
Income tax brackets to increase with inflation
The pay grades which decide how much income tax people in France pay are to be indexed on inflation, meaning that the point at which someone begins paying the tax will increase by 5.4% in 2023.
Therefore, people who have had a pay rise because of inflation will most likely not be hit by a higher tax rate, so maintaining their spending power.
Cigarette prices increase
Prime Minister Élisabeth Borne had already announced this morning on RMC and BFMTV yesterday that the price of a packet of cigarettes would rise with inflation.
“It would be quite paradoxical if increases in the price of cigarettes were kept below inflation,” she said.
“Considering the impact of tobacco on one’s health, I think that it would be more understandable [if the rises echoed inflation] and so we have decided to index the price of a packet on inflation.”
€935million for French teachers
The government announced an “unprecedented” €935million funding package to help boost teacher salaries by “at least 10%” on average, as well as additional pay for overtime hours.
In addition, €1.7billion has been given over to fund the increase to the education ministry’s pay scales which was introduced in July.
The government also plans to recruit 10,764 new civil servants to the interior, justice and education ministries.
Read more: ‘Job-dating’ to fix school shortage angers teachers in France
5,900 rooms for refugees and asylum seekers
Some 5,900 new spaces are going to be created in welcome centres and emergency shelters around France to help house refugees and asylum seekers.
The state budget also includes a 6% increase in the funding given to support “immigration, asylum and integration”.
This equates to a €113million rise in comparison to this year, when only 900 new spaces have been opened in refugee shelters.
Eric Coquerel, the La France Insoumise president of the Commission des Finances of the Assemblée Nationale, has commented that: “The spending planned by the state is hugely insufficient considering the ecological and social emergency [we face].”
France is planning to borrow €270billion next year, more than the €260billion borrowed in 2021 and 2022.
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