Daily Reports
Bruno Le Maire Defends Against Deficit Concealment Accusations
The Minister of Economy and Finance, Bruno Le Maire, on Thursday, vigorously defended himself against accusations of withholding information from Parliament regarding the unexpected slippage of the public deficit in 2023. Initially anticipated to be 4.9% of GDP, the deficit brutally rose to 5.5%. For almost three hours, Le Maire was intensely questioned by the senators of the Finance Committee, who had initiated a mission at the end of March to investigate the deterioration of the public deficit and the perceived lack of information provided to Parliament.
Le Maire attributed the deficit slippage primarily to tax revenues falling €21 billion short of expectations last year. He emphasized that all relevant information was given promptly to both Parliament and the public and that necessary actions were taken in a timely manner to mitigate the impact of lower-than-expected tax revenues. He revealed that €10 billion in savings had already been made from state spending, with an additional €10 billion in cuts planned for 2024.
Transparency in Public Finances
Responding to General Rapporteur Jean-François Husson (LR), who expressed concerns over a possible 'withholding of information', Le Maire insisted, 'All accusations that I deliberately concealed information from Parliament are serious and unfounded.' He highlighted the inherent uncertainties in deficit forecasts, citing 'very strong cyclical hazards' that affect the assessment of corporate tax revenue and economic growth trajectory.
Le Maire clarified that he did not disclose forecasts from a December 7, 2023 note predicting a deficit risk of 5.2% of GDP, as he considered the data 'incomplete' and 'inaccurate'. He argued that sharing such information prematurely could have unnecessarily sown doubt and worry, potentially widening France's borrowing interest rate gap compared to Germany. The final understanding of various taxation, local authority expenditure, and economic conditions only became clear by February 2024, leading him to warn in early March that the deficit would significantly exceed the previously set target of 4.9%.
Le Maire acknowledged an 'error in the evaluation of tax increases', particularly concerning the amounts provisioned by companies for the corporate tax (IS). He assured that measures are in place to prevent a similar mistake from recurring. Additionally, he expressed his support for 'more regular' and 'more transparent' communication between the government and Parliament concerning public finances.
Minister Delegate in charge of Public Accounts, Thomas Cazenave, confirmed that the General Inspectorate of Finance (IGF) was assigned a mission in April to review the government's forecast circuit and provide recommendations. However, he noted that the conclusions expected in July would not be made public.
- Bruno Le Maire has been leading the Ministry of Economy and Finance for seven years, advocating for sincerity, honesty, and transparency in his tenure.
- The Finance Committee's investigation followed unexpected tax revenue shortfalls and questions about the timing of the government's communication regarding fiscal challenges.
- The discussion in the committee highlighted the importance of accurate and timely economic data to maintain credibility and avoid market disruptions.
- The French government is expected to focus on further improving its communication strategies with Parliament to enhance the transparency and accuracy of financial forecasts.
