The National Public Finance Council (CNFP) has just carried out an assessment of public finances on the occasion of the draft budget for 2026 and the draft multi-annual financial programming law for the period 2026-2029 (PLPFP). Its main concern is to ensure compliance with the Medium-Term Objective (MTO), which is for the structural balance of public finances to be balanced at 0%. "This objective will be respected for the years 2025, 2026 and 2027. From 2028, on an unchanged policy basis, the structural balance would exceed the MTO, and a significant gap would occur in 2029", according to its chairman, Romain Bausch. In his view, the current trajectory of public finances - an increase in the deficit driven by a deficit that remains high at 1.5 billion a year on average for the central government from a shrinking social security surplus - will make it more complicated to manage public finances "with an unchanged policy".

Negative spending dynamics

Romain Bausch insists on the need to make savings or find new revenue, This is all the more the case given that neither the impact of the planned tax reform scheduled to come into force in 2028, nor the additional defence effort required to meet the new NATO target of 5% of gross national income (GNI) are taken into account in the budget documentation. This is a "technical" non-inclusion due to the fact that the multiannual budget is drawn up on the basis of constant legislation. But the bill will eventually arrive. That is 850 million in 2028 and 2029 respectively for the tax reform and an estimated additional cost of between 440 and 880 million in 2029 for defence spending.

Two additional disbursement items that will exacerbate the current negative spending trend, "a trend driven by new and recurring measures" such as the central government's contribution to the financing of health and pension insurance and the State's assumption of the costs generated by the use of electricity networks. These two expenses will cost the State budget 900 million by 2029.

At the same time, central government revenues will not return to the level of +6.5% between 1996 and 2024. "We will be averaging +4.5% until 2029", says Romain Bausch. The CNFP expects the nominal general government balance to worsen from a deficit of €706 million in 2025 (0.8% of GDP) to a deficit of €1.264 billion in 2029 (1.1% of GDP). At the same time, spending would continue to rise at a high rate - +6.1% in 2025 and +5.7% in 2026, then +4.7% on average over the period 2027-2029. This would result in a general government deficit of between €2.6 billion (or 2.3% of GDP) and €3 billion (or 2.7% of GDP) in 2029 instead of the €1.3 billion (or 1.1% of GDP) shown in the PLPFP 2025-2029.

A policy of suggestions

Will the CNFP be heard? By law, the government is obliged to react to the recommendations issued by the Council. "In practice", confides its chairman, "since last year we have stopped making specific recommendations in favour of a more general message. We have the impression that both the government and MPs are aware of the problems. We prefer to raise politicians' awareness rather than make specific recommendations that would ultimately have little effect."

Aside from an effort at moderation, the CNFP suggests decoupling the draft budget from the multiannual financial programming bill. This would make it easier to understand the different issues at stake in these two laws and enable better use to be made of the strategic tool that is the medium-term budgetary framework". He also calls for the multiannual framework to be adapted to better incorporate the country's current and future challenges (ageing population, housing, energy and digital transition, mobility, defence...).