24 March 2017

2017- n° 82

In 2016, the public deficit reached 3.4% of GDP, the compulsory levies ratio decreased by 0.1 points at 44.3% of GDP General government national accounts - first results - year 2016

In 2016, public deficit reached € −75.9 bn, accounting for −3.4% of GDP after −3.6% in 2015. As a share of GDP, revenue decreased from 53.1% to 52.8%. Expenditure went down by 0.5 points, from 56.7% to 56.2%. The compulsory levies ratio decreased by 0.1 points to 44.3% of GDP.

Overall expenditure decelerated in 2016: +1.1% after +1.4%. Operating expenditures rose by 0.7% in 2016 after 1.2% in 2015. Intermediate consumption slowed down (+0.2% after +1.9%) as well as wage compensation (+0.8% after +1.0% in 2015). The debt interest charges went down strongly again (−5.1% after –4.5% in 2015) due to a further fall in interest rates.

Social benefits rose by +1.8% after +1.6% in 2015. The acceleration of benefits in kind (+2.8% after +1.8%) was driven particularly by health care expenditure on prescription drugs and on ambulatory medicine. Social benefits in cash rose by +1.5% like in 2015.

Other transfers and subsidies rose by 2.0% after a sharp increase in 2015 (+7.2%) due to the ramp-up of the tax credit for competitiveness and jobs (crédit d'impôt pour la compétitivité et l'emploi,

Net acquisition of non-financial shrunk by 0.6% in 2016 (€ −0.5 bn) after a sharp decrease in 2015 (-4.7%). The decrease is mainly due to a fall in local government investment (€ −1.4 bn after € −4.6 bn in 2015). Conversely, State Government investment increased, notably military equipment.

All in all, expenditure excluding interest charges went up by 1.3% (after +1.7% in 2015), faster than inflation. Expenditure excluding tax credits increased by 1.2% in 2016 after 0.9% in 2015.

Overall revenue decelerated in 2016: +1.4% after +2.0%. Taxes on income and wealth slowed (+0.6% after +1.3%). Social contributions including contribution sociale généralisée (CSG) rose thanks to a dynamic wage bill. By contrast, social contributions on investment income decreased because of low interest rates and low return of life insurance. Personal income tax increased by € +0.8 bn in 2016 (after +€0.5 bn in 2015). Corporate tax decreased by €0.5 bn owing to the abolition in 2016 of the exceptional additionnal corporate tax.

Taxes on products and production increased by 2.3% after +3.1% in 2015. VAT increased by €2.5 bn after € +3.2 bn in 2015. Domestic consumption tax on energy products rose by €1.7 bn due to the ramp-up of carbon tax, the droits de mutation à titre onéreux (tax on real estate transactions) by € +1.0 bn, the taxe foncière sur les propriétés bâties (land tax) by € +1,5 billion.Conversely, the contribution sociale de solidarité des sociétés (corporate tax) decreased by €0.8 bilion as a result of the gradual raise of the abatement of this tax.

Social contributions accelerated (+1.5% after + 1.0%) due to a more dynamic wage bill. Household contributions increased by 2.3% after +1.7% and employers' contribution rose by 1.1% after 0.6%. However, employers' contributions were affected by the reduction of the rate of contribution to family allowance for wages between 1.6 and 3.5 times the minimum wage.

The reduction in general government net borrowing in 2016 was mainly due to local government and to a lesser extend to social security funds. local government recorded a net lending of €3.0 bn after a near balance in 2015) mostly due to a further decline in their investment and decelerating operative expenditure.

The deficit of social security funds also improved by €1.8 bn. Their revenue was more dynamic in spite of lower rate of contribution to family allowance. Expenditure were lessened by the transfert from CNAF to the State of a part of housing benefits which deteriored equally the Statebalance.

The State government deficit increased by €2.5 billion and the deficit of Central agencies decreased by €0.3 billion. The reclassification of the contribution au service public de l'électricité (CSPE) from central agencies to State government raised strongly expenditure and revenue of State Government and lowered those of central agencies.

At the end of 2016, the Maastricht debt accounted for €2,147.2 billion. It rose by €49.2 billion in 2015 after € +60.2 billion in 2015. It reached 96.0% of GDP at the end of 2016, after 95.6% at the end of 2015. The net public debt had a similar growth, reaching 87.5% of GDP after 86.9% at the end of 2015.

The State contribution to debt rose by €48.8 bn, a variation lower than its net borrowing (€74.1 bn), mainly explained by high levels of premiums. The contribution of central agencies decreased by €6.9 bn, of which €4.8 bn are due to CSPE's debt which was integrated in State Government.

Local governement debt reached €199.6 bn at the end of 2016 compared to € 196.7 bn at the end of 2015, an increase by €2.9 bn, despite a net lending of €3.0 bn. Local governement increased their deposits at the French Treasury by €3.9 bn.

Social security funds contribution to debt grew by €4.7 bn to stand at €225.0 bn at the end of 2016.