The last arbitrations on the major economic assumptions of the 2020 finance bill will be made this week. Despite the global slowdown, Bercy remains fairly confident about growth. The objective of 3 billion euros of additional savings mentioned at the end of July is however abandoned. The deficit will be between 2.1% and 2.2% of GDP.

The only good news for Bercy is that low interest rates should generate savings of several billion euros.

Faithful to the line of conduct it has assigned itself since the start of the five-year term, the government is doing everything in this return to make the budget a non-event. No accounting quarrels! But September 25, date of presentation of the Finance Bill (PLF) for 2020, is approaching, and the executive will have to come out of the woods. Thus Bercy is preparing to transmit by the end of the week the main assumptions of this PLF to the high council of public finances. Growth, deficit: the last trade-offs are being prepared, with the desire not to steer public opinion via unpopular measures, at the risk of slightly degrading the accounts compared to the objectives posted only two months ago.

There are also great unknowns about economic activity, linked to the external context. France is resisting for the moment much better than many of its European neighbors, and the Minister of the Economy, Bruno Le Maire, confirmed last Thursday the growth forecast of 1.4% for 2019. However, should we review lower expectations for 2020, expected so far at + 1.4% there too? “It’s a debate”, recognizes a high-ranking government source. “We should be able to stay at 1.4%”, wants to believe another key player.

Trade war

Even if the French economy is less oriented than others towards exports, it should suffer the repercussions of the trade war between China and the United States which could strain world growth by 0.5% next year. And German inaction on fiscal stimulus, despite the growing shadow of recession, can only generate frustration in Paris.

Divine surprise of low interest rates

Beyond growth, and forecasting tax revenues, it is the expenditure side that is the subject of debate within the executive. Certainly, Bercy can count on the divine surprise of low rates. Just last week, France borrowed a record amount of 10.14 billion euros with for the first time a negative rate for a maturity of 15 years! Gérald Darmanin has already announced a decrease in the debt charge bill of 2 billion euros for 2019, and the Court of Auditors had calculated that the amount could climb to 4 billion for 2020.

But we must finance the income tax cut planned for next year, and other actions to come, such as hospital emergencies. The problem could have been solved by slashing the expenses. At the beginning of the summer, a note was produced at Bercy which estimated the savings needed next year at 3 billion euros to meet the deficit targets, beyond the measures already announced (APL, Unédic, etc. ). But the good resolutions will not have held the summer. Find 3 billion euros in additional savings, “The President of the Republic does not want it”, we breathe within the executive.

The avenues that were explored in July turned out to be inconclusive. Some argued to question the reductions in charges above 1.6 minimum wage, but Bruno Le Maire buried the idea so as not to upset companies which will already have to suffer cuts in their tax credits. The work on daily allowances has been postponed. And some politically sensitive issues (such as cutting back parental leave or tackling what remains of family allowances for the better-off) have been put away.

In the end, the deficit forecast for 2020 (for the moment set at 2.1% of GDP) should be between 2.1% and 2.2% of GDP, according to our information. “Keeping the objective of a deficit at 2.1% of GDP in 2020 will be very difficult”, entrusts a manager to Bercy, for whom “The important thing is that there is no increase in the structural deficit [hors effets de la conjoncture, NDLR]. » For the budget as for other aspects of government action, the time has come for soothing balm rather than too spicy measures.