Informations Rapides · 29 March 2022 · n° 81

In 2021, the public deficit reached 6.5% of GDP, the notified debt 112.9% of GDP General government national accounts - first results - year 2021

The general government deficit for 2021 stands at €160.9 billion, accounting for 6.5% of gross domestic product (GDP), after 8.9% in 2020 and 3.1% in 2019. Buoyed by the economic rebound, revenue increased by €101.8bn, i.e. by 8.4%, which is higher than the increase in GDP in value terms. Thus, as a proportion of GDP, they reached 52.8% after 52.5% in 2020 and 52.3% in 2019. The compulsory tax rate is almost stable at 44.5%. Expenditure increased by €57.1bn (+4.0%) and represents 59.2% of GDP in 2021, after 61.4% in 2020 and 55.4% in 2019. General government debt stands at 112.9% of GDP at the end of 2021.

In 2021, general government expenditure rose again sharply, by 4.0% after 5.1% in 2020. Up by €57.1bn, it amounts to 59.2% of GDP, after 61.4% in 2020 and 55.4% in 2019.

Operating expenses accelerated, rising by 3.7% after a 2.0% increase in 2020. Remuneration accelerated again (+€8.2bn after +€6.9bn in 2020) with, in particular, the first full year of revaluations of the "Ségur de la santé" and the dynamism of the wage bill for contractual workers employed by local administrations (Apul). Intermediate consumption accelerated sharply (+€7.2bn after +€1.0bn in 2020) with the resumption of purchases that had been slowed or postponed during the confinements of 2020 in hospitals and municipalities in particular.

Social benefits increased again (+1.2% in 2021, i.e. +€8.1bn) after having risen very strongly in 2020 (+7.7%). Social transfers in kind increased sharply, by €17.4bn, driven by both health spending related to the health crisis (vaccinations, tests) and the rebound in self-employed health professionals. On the other hand, cash benefits declined with the reduction in emergency measures to deal with the crisis: partial activity allowances in particular fell by €16.0 billion in 2021 compared to 2020. This decline was partly offset by the introduction of the 'inflation allowance' (€3.8bn).

Subsidies and other transfers, which were also particularly stimulated by the crisis measures in 2020, remained very dynamic in 2021: they increased by 12.6%, after +12.2% in 2020, driven in particular by aid paid by the solidarity fund (+€7.0bn) as well as by the increase in the recovery plan and the fourth plan for future investment: These include support for youth employment, vocational training and apprenticeships, investment aid for the transport, housing and research sectors, etc. In addition, the contribution to the European Union budget increased again in 2021, by €2.8bn, including a €1.2bn plastic contribution (€0.80 per kilogram of non-recycled plastic packaging waste), as part of the European Union's new own resource introduced in 2021.

Interest expense on debt rebounded (+15.0%, or +€5.0bn, after –14.7%). The effect of low interest rates was more than offset by the effect of high inflation on the interest cost of inflation-linked bonds.

Net acquisitions of non-financial assets, mainly made up of investment, recovered (+3.6%, or +€3.2bn, after a 2.8% decline in 2020). This rebound is mainly due to the rebound of the local administrations (+€4.0bn in 2021 after –€5.6bn in 2020), in particular of municipalities, whose investment fell sharply during the confinements of 2020, which was moreover a year of renewal of local mandates.

In 2021, general government revenues rebounded strongly, at +8.4%, after a 4.8% drop in 2020. They benefited from the upturn in activity as well as the European financing of part of the recovery plan via the 'recovery and resilience facility'.

Taxes recovered strongly, rising by €47.7bn after a contraction of €31.4bn in 2020. VAT revenues increased by €23.3bn (+14.4%) due to the recovery in household consumption and business investment. Current taxes on personal and corporate income, as well as on assets, increased by €18.9bn in 2021, despite the reduction in the taxe d'habitation (€3.1bn). The dynamism of real estate transactions, in volume as well as in price, and of inter vivos donations stimulated the transfer tax and the free transfer tax respectively (+€7.4bn). These increases were mitigated by the decrease in taxes on production (-€8.9bn) resulting from the tax reform implemented as part of the France Relance programme.

Actual social security contribution receipts rebounded with the wage bill. They increased by 7.4%, or €25.9 billion, after a 4.3% drop in 2020. Employers' contributions rose by €18.7 billion, while contributions from households, employees and self-employed, increased by €7.2 billion.

Sales and other operating revenues rebounded with a growth of €6.4bn after a drop of €5.7bn in 2020. The local administrations, in particular the municipalities, account for almost two thirds of the increase with a growth of 9.7%.

Property income was dynamic after having fallen in 2020 (+€3.3bn after -€4.5bn), in particular income from participation.

Finally, other revenues are particularly dynamic (+€15.0bn) with the financing by the European Union of part of the expenditure of France Relance, evaluated at €14.4bn.

The deficit of the social security funds fell sharply (€16.9bn after €46.0bn in 2020, i.e. a reduction of €29.2bn), with the gradual lifting of emergency measures and the rebound in growth stimulating revenue. However, social benefits in kind provided by associations were very dynamic (+€16.2bn), notably due to the financing of testing and vaccination campaigns.

Excluding the assumption of the SNCF Réseau debt of €25 billion in 2020, the State's financing requirement was reduced by €11.4 billion to €143.8 billion in 2021 after €180.2 billion in 2020. Its revenue increased sharply in the wake of economic activity, while its expenditure remained dynamic, particularly under the effect of the stimulus plan.

Local authorities posted a surplus of €4.7bn in 2021. They benefited from a strong increase in transfer taxes, while the deficit of various local government bodies (such as the Société du Grand Paris or Île-de-France Mobilité) increased.

Finally, the financing balance of the various central government bodies improved by €1.2 billion in 2021 (excluding the impact of the assumption of SNCF Réseau's debt, of €25 billion in 2020) to reach €0.3 billion.

General government debt (consolidated gross debt in nominal value) increased by €164.9 billion in 2021 and stands at €2,813.1 billion. Expressed as a percentage of GDP, the public debt decreases from 114.6% at the end of 2020 to 112.9%, due to the recovery of GDP. Net public debt increased by €162.4 billion (101.2% of GDP), slightly less than gross debt, mainly due to the increase in general government cash (€1.8 billion) and securities purchases (€2.9 billion), partially offset by the decrease in outstanding loans granted by general government (€2.1 billion).

The increase in public debt in 2021 came mainly from the State (+€144.9 billion), which is mainly indebted by issuing long-term bonds. Thus, the outstanding amount of long-term bonds increases by €150.3 billion after €123.9 billion in 2020, while that of short-term securities decreases (–€6.2 billion after +€54.7 billion in 2020).

Local public administrations also contributed to the increase in debt (+€15.8 billion). This increase is due to the debt of the Société du Grand Paris (+€8.0 billion), the regions (+€3.5 billion), Île-de-France Mobilités (+€2.5 billion) and the municipalities (+€1.5 billion). Overall, this increase in the local administration's debt feeds their cash flow (+€14.4bn).

The contribution of the social security funds increased slightly (+€3.8 billion), after their record debt in 2020 (+€77.7 billion compared to 2019). In addition, the associations used their cash (–€6.3 billion) and sold mutual fund shares (-€4.1 billion) to finance their deficit. With the continued assumption of Social Security debt by Cades, a rebalancing between long-term (€32.7 billion) and short-term (–€26.9 billion) securities is taking place after a year in 2020 during which short-term debt was more favoured.

The contribution to the public debt of the various central government bodies increased lightly by €0.5 billion.