Informations Rapides · 28 March 2023 · n° 75

In 2022, the public deficit reached 4.7% of GDP, the public debt 111.6% of GDP General government national accounts - first results - year 2022

The general government deficit for 2022 stands at €124.9 billion, accounting for 4.7% of gross domestic product (GDP), after 6.5% in 2021 and 9.0% in 2020. Revenues remained very dynamic in 2022 and increased in value by €95.7bn, i.e. +7.3% after +8.4% in 2021. As a proportion of GDP, they reached 53.4% after 52.6% in 2021 and 52.4% in 2020. The compulsory tax rate increases to 45.3% after 44.3% in 2021. Expenditure increased at a similar rate to 2021, +4.0%, i.e. an increase of €58.6bn. As a proportion of GDP, it kept decreasing and reached 58.1% of GDP in 2022, after 59.1% in 2021 and 61.3% in 2020. However, it remained well above their 2019 level. General government debt in the Maastricht sense reached 111.6% of GDP at the end of 2022 after 112.9% at the end of 2021.

In 2022, general government expenditure, including tax credits, rose by 4.0% after 3.9% in 2021 and 5.4% in 2020. Up by €58.6bn, it amounted to 58.1% of GDP, after 59.1% in 2021 and 61.3% in 2020.

Operating expenditure accelerated, rising by 5.0% in 2022 after +4.4% in 2021. Remuneration accelerated sharply (+€13.6bn after +€9.9bn in 2021) with the revaluation of the index point in the civil service on 1st July 2022, the increase in the minimum wage, and the rise in the individual purchasing power guarantee scheme. Intermediate consumption rose again (+€8.4bn after +€8.3bn in 2021), due to the increase in energy prices.

Social benefits increased at almost the same rate as in 2021 (+1.1%), i.e. an increase of €7.5bn. Social transfers in kind slowed down (+1.4%, or +€2.3bn) after a strong rebound in 2021 (+13.8%) linked to the resumption of care consumption, and to vaccination and testing campaigns during the epidemic. On the other hand, cash benefits rebounded (+1.0%, or +€5.2bn after -2.1% in 2021). Retirement pensions (+€15.3bn) and solidarity benefits (RSA, activity allowance, disabled adult allowance), which benefited from early revaluations on 1st July, as well as sick leave (+€2.0bn) contributed to the increase in benefits. On the other hand, furlough schemes and unemployment benefits decreased again with the good performance of the labour market and the end of the health crisis (-€14.4bn).

Subsidies and other transfers slowed to 1.5% (or +€3.3bn) after +9.5% in 2021. Expenditure to support households and businesses against high energy prices replaced expenditure to support businesses related to the health crisis. Aid paid to businesses, particularly via the solidarity fund, fell strongly in 2022 (-€25.9bn). This drop was offset by a sharp increase in expenditures to support households and businesses against high energy prices (electricity and gas tariff shields, fuel rebates, subsidies for energy bills for businesses, for a total subsidy of €26.2bn). France's contribution to the European Union budget declined in 2022 (-€2.2bn). Investment grants rose again (+8.1%), particularly with spending under the recovery plan and the France 2030 program.

Interest expense on debt accelerated sharply in 2022 (+€15.1bn or +39.7%, after +€5.3bn in 2021). This increase was almost entirely due to inflation-linked bonds (OATi and OAT€i). The interest cost in 2022 was €53.2bn, and amounted 2.0% of GDP, its highest level since 2016.

Net acquisitions of non-financial assets, mainly made up of investment, accelerated (+€10.2bn or +10.9%, after +4.1% in 2021), driven by investment by local authorities and investment in State military equipment.

In 2022, general government revenues benefited from the continued catching up of the French economy after the Covid-19 crisis and from the price increase, especially as some tax revenue bases (wages, corporate profits, domestic demand) were more dynamic than GDP in value (+5.7%). In total, revenues increased by 7.3%, or €95.7bn, after a strong rebound in 2021 (+8.3% after -4.8% in 2020). This is the highest increase in revenue in value since 1985, excluding 2021.

Taxes (before deduction of tax credits) accelerated: +7.9% (+€59.6bn) after +6.7% in 2021. VAT revenues were still dynamic, at +8.1% (or +€14.9bn) after +14.4%, because of the acceleration in consumer prices and the increase in the volume of household consumption. Taxes on production rebounded to +9.8% (+€10.7bn) after the 6.7% drop in 2021 which was due to the tax reduction measures of the stimulus package. Current taxes on household and corporate income, as well as on wealth, rose sharply in 2022: +10.5% (+€33.9bn), after +6.1%, driven in particular by corporate tax profits and the dynamism of wages, and despite the drop in the corporate tax rate. These increases in tax revenue were partly counterbalanced by the abolition of the public broadcasting contribution and the continued reduction in the housing tax. Furthermore, the domestic tax on electricity consumption (TICFE) fell sharply with the implementation of the tariff shield (-€7.1bn).

Revenue from actual social security contributions increased again, by 6.5%, or +€24.2 billion, after +7.5% in 2021. They benefited from the dynamism of wages (+8.1%).

Sales and other operating revenues were dynamic again in 2022, to +7.0% after +8.1%, especially for local government.

Property income slowed down but remained dynamic (+6.8%), in line with the good overall economic activity, after the strong rebound of +30.7% in 2021, following the decline in property income in 2020.

Finally, other revenues slowed down strongly, to 1.8% (+€1.5bn) after an exceptional increase in 2021 (+21.1%). The European financing of the stimulus package amounted €11.1bn in 2022 after €13.5bn in 2021.

Excluding the assumption of the SNCF Réseau debt of €10.0bn in 2022, the deficit of the State was reduced by €5.5bn. Its revenue remained dynamic with the good economic performance, while its expenditures, excluding the assumption of the SNCF Réseau debt, increased at the same rate as in 2021.

The balance of the social security administrations (Asso) was in surplus (+€9.2bn) after a deficit of €17.2bn in 2021. Tax revenue (especially CSG) and social contribution benefited from the wages dynamic (+€47.2bn or +7.1%). Expenditures increased more moderately (+€20.5bn or +3.0%): the increase in pension benefits (apart from state pensions which are part of state expenditure) was partly offset by the decrease in furlough schemes, unemployment benefits, and Covid-19 vaccination and testing campaign expenses.

The balance of local government also improved, but to a lesser extent. It was a surplus of €0.8bn after a deficit of €0.8bn in 2021. Local authorities had a surplus of €4.8bn in 2022. Their tax revenues rose, with an increase in property tax, and a rebound of the contribution on the value added of firms. Their expenses also increased, driven by energy prices and public agent wages.

Finally the balance of the various central government bodies improved by €3.6bn in 2022 (excluding the assumption of SNCF Réseau debt by the State of €10,0bn), and amounted +€2.0bn in 2022, after €-1.5bn in 2021. Including the assumption of SNCF Réseau's debt by the State, their balance amounted +€12.0bn in 2022.

General government Maastricht debt (or consolidated gross debt in nominal value) increased by €126.4 billion in 2022 and stood at €2,950.0 billion. Expressed as a percentage of GDP, the public debt decreased to 111.6% after 112.9% at the end of 2021 and 114.6% at the end of 2020. Net public debt increased by €161.1 billion (after +€163.3bn), more than gross debt, mainly due to the decrease in general government cash (-€33.6 billion) and securities sales (-€1.4 billion). Net debt stood at 101.0% of GDP.

The increase in public debt in 2022 came mainly from the State (+€132.1 billion), which is mainly indebted with long-term bonds (+€140.2 billion, net of reimbursements) while short-term debt decreased again in 2022 (-€6.9 billion). Moreover, deposit in Treasury decreased (-€1.8 billion).

In contrast, the contribution of the Asso decreased (-€3.8 billion) and is back to its end of 2020 level (€270.9 billion). The continued debt assumption of Acoss and of hospitals by Cades resulted in a reduction in short-term debt in favour of long-term securities.

The contribution to the public debt of the various central government bodies also decreased (-€1.7 billion). SNCF Réseau’s debt reduction (-€3.6 billion) was partly offset by Action Logement Social’s debt in the form of bonds (+€2.0 billion).

Local public administrations’ debt remained almost stable (-€0.3 billion): the increased in debt of the Société du Grand Paris (+€1.5 billion) and Ile-de-France Mobilité (+€0.8 billion) were offset by the debt reduction of local authorities.