Key Benefits:
The National Assembly and the Senate deliberated,
The National Assembly adopted,
The President of the Republic enacts the following legislation:
The report annexed to this Act is approved, specifying the context, objectives and conditions for the implementation of public finance programming for the period 2012-2017.
The medium-term objective of public administrations referred to in Article 3 of the Treaty on Stability, Coordination and Governance within the Economic and Monetary Union, signed in Brussels on 2 March 2012, is the structural balance of public finances.
In the macroeconomic context described in the report referred to in section 1 of this Act, the trajectory of public finances is as follows:
1° Evolution of the actual balance and structural balance of public administrations as defined in Schedule 2 to the report annexed to this Act:
| Actual public balance (1 + 2 + 3) | 4.5 | ― 3.0 | 2.2 | 1.3 | 0.6 | 0.3 |
| Economic balance (1) | 0.8 | 1.2 | ― 1.0 | 0.8 | 0.5 | 0.3 |
| Ad hoc and temporary measures (2) | 0.1 | 0.2 | 0.1 | 0.0 | 0.0 | 0.0 |
| Structural balance (potential GDP points) (3) | 3.6 | ― 1.6 | 1.1 | 0.5 | 0.0 | 0.0 |
| Actual public balance | 4.5 | ― 3.0 | 2.2 | 1.3 | 0.6 | 0.3 |
| including: - central government | 3.9 | 2.7 | 2.1 | ― 1.6 | 1.2 | 1.1 |
| local government | 0.1 | 0.1 | 0.1 | 0.0 | 0.1 | 0.1 |
| - Social security administrations | 0.5 | 0.2 | 0.0 | 0.3 | 0.6 | 0.8 |
The objective of structural effort of public administrations is as follows:
| Structural effect | 1.4 | 1.9 | 0.5 | 0.5 | 0.4 | 0.1 |
| including: ― new measures on mandatory sampling | 1.1 | 1.6 | 0.1 | 0.2 | 0.0 | 0.3 |
| - expenditure effort | 0.3 | 0.3 | 0.6 | 0.7 | 0.4 | 0.4 |
In the macroeconomic context referred to in Article 2, the objectives of the evolution of public spending, the rate of mandatory levies and public debt are as follows:
| Public expenditure | 56.3 | 56.3 | 55.4 | 54.4 | 53.7 | 53.1 |
| Compulsory sampling rate | 44.9 | 46.3 | 46.3 | 46.2 | 46.2 | 45.9 |
| Public administration debt | 89.9 | 91.3 | 90.5 | 88.5 | 85.8 | 82,9 |
| Debt of public administrations, excluding financial support to the euro area | 87.4 | 88.4 | 87.3 | 85.4 | 82,9 | 80.1 |
I. ― When significant deviations between the execution of the past year and the structural balance trajectory referred to in Article 2, i.e. deviations representing at least 0.5% of the gross domestic product over a given year or at least 0.25% of the gross domestic product per year on average over two consecutive years, the Government, in accordance with its commitments as a result of the treaty, signed in Brussels on 2 March 2012, above:
1° Explains the reasons for these discrepancies in the consideration of the draft regulation legislation by each assembly. These deviations are assessed as part of an assessment that refers to the structural balance and includes an analysis of the underlying structural effort defined in the report referred to in Article 1;
2° Proposes correction measures in the report on the evolution of the national economy and on the directions of public finances mentioned in theArticle 48 of Organic Law No. 2001-692 of 1 August 2001 relating to the financial laws, which are taken into account in the next financial bill of the year or the Social Security Financing Bill of the year.
These corrections, which may be applied to all public administrations or to some subsectors only, allow for a return to the structural balance trajectory referred to in section 2 within a maximum period of two years from the end of the year in which the deviations were found.
II. ― The obligations set out in 2° of I do not apply in the event of exceptional circumstances that justify the discrepancies found, as defined in Article 3 of the Treaty, signed in Brussels on 2 March 2012, referred to above.
III. ― When exceptional circumstances have disappeared, the Government has introduced a bill for public finance programming in line with France's European obligations, at the latest during the consideration of the next financial bill of the year.
I. ― The aggregate consists of expenses of the general budget of the State, excluding refunds and discounts, levies on revenues and of the product, capped or fixed, of taxation of all kinds mentioned in theArticle 46 of Act No. 2011-1977 of 28 December 2011 for 2012 cannot, at constant perimeter, exceed €37.5 billion for each of the years 2013, 2014, 2015, 2016 and 2017, in constant euros of 2012. This amount is updated based on the forecast of consumer price changes, excluding tobacco, associated with the year's financial bill for each of the years 2013 to 2017.
II. – Out of debt burden and out of contributions to the "Pensions" trust account, this aggregate is, at constant perimeter and for each of the years 2013 to 2017, not more than 279.455 billion euros.
III. ― In order to ensure compliance with the guidance set out in I and II, each year, for each program with limiting credits, are subject to at least 0.5% of the payment credits and commitment authorizations available under title 2 "Personal Expenditures", and at least 5% of the payment credits and commitment authorizations opened on other securities. For the reserve on title 3 "Operating expenses", the application of this rate can be modified based on the nature of the expenses incurred by organizations receiving a public service subsidy.
The overall ceiling of the employment authorizations of the State and its operators, mentioned to the articles 69 and 70 of Act No. 2011-1977 of 28 December 2011 referred to above, is stabilized over the programming period.
I. ― Organizations involved in a public service mission, other than territorial authorities and those within the scope of the Social Security Financing Acts, beneficiaries of budgetary appropriations or taxation of all kinds, contribute to the achievement of the medium-term objective set out in Article 2, if any by a gradual reduction in the proceeds of taxation of all kinds that are affected or by a gradual decrease in the appropriations allocated to them.
II. ―Article 12 of Act No. 2010-1645 of 28 December 2010 for public finance programming for the years 2011 to 2014 is supplemented by a III written as follows:
"III. ― This section does not apply to borrowings from the European Investment Bank. »
Territorial authorities contribute to the effort to rehabilitate public finances in the manner in which they are associated.
I. ― The objective of expenditure of the mandatory basic social security plans cannot, at constant scope, exceed the following amounts, expressed in billions of euros:
| 454,7 | 469.9 | 484,6 | 499.6 | 514.8 | 531.0 |
| 170.8 | 175.4 | 180.0 | 184.5 | 189.1 | 193.8 |
In 2013, 2014 and 2015, the budgetary limits allocated to the missions of the general budget of the State, excluding the contribution of the general budget to the "Pensions" trust account, excluding debt charges and non-refunds and debursements, cannot, at constant scope, exceed the following amounts, expressed in billions of euros:
| External action of the State | 2.79 | 2.83 | 2.81 | 2.81 |
| General and territorial administration of the State | 2.22 | 1.97 | 2,19 | 1.95 |
| Agriculture, food, forest and rural affairs | 3.47 | 3.10 | 3.00 | 2.92 |
| Official development assistance | 3.30 | 3.10 | 3.07 | 3.07 |
| Veterans, memory and ties with the Nation | 3.12 | 3.04 | 2.95 | 2.83 |
| Council and State control | 0.48 | 0.49 | 0.50 | 0.50 |
| Culture | 2.54 | 2,44 | 2.38 | 2.35 |
| Defence | 30.35 | 30.11 | 30.15 | 30.15 |
| Government Action Directorate | 1,14 | 1,14 | 1,13 | 1,12 |
| Ecology, sustainable development and development | 8,00 | 7.63 | 7.29 | 7.09 |
| Economy | 1.59 | 1.56 | 1.53 | 1.52 |
| All Territories, Housing and City | 8.20 | 7.77 | 7.73 | 7.73 |
| State financial commitments | 1,15 | 1,11 | 1.04 | 0.98 |
| School education | 45.40 | 45.69 | 46.10 | 46,58 |
| Financial and human resources management | 9.03 | 8.85 | 8.78 | 8.61 |
| Immigration, asylum and integration | 0.59 | 0.67 | 0.66 | 0.64 |
| Justice | 6.02 | 6.20 | 6.30 | 6.32 |
| Media, book and cultural industries | 1.41 | 1,22 | 1.09 | 0.97 |
| Outre-mer | 1.90 | 1.99 | 2.07 | 2,14 |
| Policy of the Territories | 0.34 | 0.32 | 0.31 | 0.30 |
| Provisions | 0.15 | 0.03 | 0.23 | 0.8 |
| Research and higher education | 25.12 | 25,62 | 25,74 | 25,86 |
| Social and pension schemes | 6.37 | 6.54 | 6.75 | 6,84 |
| Relations with local authorities | 2.56 | 2.74 | 2.60 | 2.59 |
| Health | 1.41 | 1,29 | 1,30 | 1,30 |
| Security | 11,58 | 11,68 | 11,78 | 11,96 |
| Civil security | 0.39 | 0.39 | 0.40 | 0.41 |
| Solidarity, integration and equality of opportunity | 12.53 | 13.18 | 13,48 | 13,74 |
| Sport, youth and associative life | 0.49 | 0.47 | 0.48 | 0.56 |
| Labour and employment | 9,95 | 10.13 | 9,68 | 9.74 |
| In memory: public authorities | 1.00 | 0.99 | 0.99 | 0.99 |
Annual reduction of the proceeds of taxation of all kinds referred to in I of Article 46 of Act No. 2011-1977 of 28 December 2011 referred to above is at least equal to the following amounts expressed in millions of euros:
| 191 | 265 | 465 |
All State financial competitions to territorial authorities cannot, at constant scope, exceed the following amounts, expressed in billions of euros:
| 50.53 | 50.53 | 49.78 | 49.03 |
I. ― The impact of mandatory sampling measures, adopted by Parliament or taken by the Government by regulation as of 1 July 2012, cannot be less than the following amounts, expressed in billions of euros:
| 7 | 24 | ― 3 | 7 | ― 3 | 7 |
Any surpluses, found in relation to the assessments of the year's financial law or the year's social security financing law, the proceeds of taxation of all kinds established for the benefit of the State or the contributions and contributions of social security to the mandatory basic plans and the organizations involved in their financing, are used in their entirety to reduce the public deficit.
The creations or extensions of tax expenditures, on the one hand, and the creations or extensions of reductions, exemptions or slaughters of assortments for contributions and social security contributions to the mandatory basic plans or to the organizations involved in their financing, on the other hand, introduced by a text promulgated as of January 1, 2013 are applicable only for a limited period, specified by the text which institutes them.
Civil investment projects financed by the State, its public institutions, public health institutions or health cooperation structures are subject to a prior socio-economic assessment. When the total amount of the project and the amount of funding provided by these persons exceed the thresholds set by decree, this evaluation is subject to an independent prior counter-experts.
The Government shall transmit to Parliament the evaluations and counter-expertise referred to in the first paragraph.
The conditions for the application of this article are provided by decree.
Tax expenditures, on the one hand, and reductions, exemptions or decreases in contributions to mandatory basic social security plans or organizations that contribute to their funding, on the other hand, are subject to an annual assessment of their efficiency and effectiveness.
These assessments are carried out each year by a fifth of the tax expenditures, reductions, exemptions or trimmings and all those that, under the text that established them, will cease to apply within twelve months.
These assessments are forwarded to Parliament.
The Government shall transmit annually to Parliament, after consultation with the local finance committee and prior to the public finance policy debate, an assessment of the implementation of this Act. In particular, this report indicates the performance data, at constant scope, of the objectives set out in Article 6 I and II, Article 10 I and II and Articles 11 and 12. It also provides a justification for any discrepancies between the commitments made in the last stability programme transmitted to the European Commission and the forecasts of this Law.
This report is made public and presented in a single document, which is attached to the advice of the local finance committee.
I. ∙ The Government presents annually to Parliament:
1° Prior to 1 June, the amount of tax expenditures recorded for the last fiscal year ended;
2° Prior to the first Tuesday of October, the annual cost estimate for future fiscal year and current fiscal year;
3° Prior to October 15, the annual cost estimate for the coming year and the current year of the reductions, exemptions or reductions in the amount of social security contributions and contributions to the mandatory basic social security plans or the organizations involved in their financing, as well as the amount of the estimated cost for the last fiscal year of these reductions, exemptions or cuts.
II. ― When presenting the forecasts set out in 2° and 3° of I, the Government shall transmit to Parliament a review of the creations, amendments and deletions of measures mentioned in the same I:
1° Adopted in the preceding twelve months;
2° Planned by the Finance Bill and the Social Security Financing Bill for the following year.
Prior to June 30, 2013, the Government submits to Parliament a report that assesses all taxation of all kinds to third parties other than territorial authorities and social security agencies. This evaluation focuses on the performance, relevance of the allocation of these taxes and the opportunity to reintegrate the corresponding resource into the State's general budget.
I. ― Except for his articles 12 and 14, Act No. 2010-1645 of 28 December 2010 for the years 2011 to 2014 is repealed.
II. ― After the word "article", the end of B of Article 16 of Law No. 2012-1509 of 29 December 2012 for 2013 is thus written: 13 of Act No. 2012-1558 of 31 December 2012 for the years 2012 to 2017."
This law will be enforced as a law of the State.
A N N E X E
REPORT TO THE PROGRAM
PUBLIC FINANCIALS 2012-2017
I. ― Macroeconomic context and overall strategy.
A. ― Macroeconomic scoping.
1. Short-term outlook (2012-2013).
2. The medium-term outlook (2014-2017).
B. ― Public finance trajectory.
1. General medium-term strategy of public finances.
2. Evolution of the structural balance of public administrations.
3. Debt trajectory (debt balance gap, debt flows) and reference to the European debt rule.
C. ― The public finances trajectory: analysis of the overall recovery effort.
1. Impact of recovery measures.
2. Decomposition of structural balance and structural effort.
D. ― The trajectory of public finances: subsector analysis.
1. The trajectory of the state.
2. Trajectory of various central administrative bodies.
3. Trajectory of social security administrations.
4. Trajectory of local government.
II. – The three-year state budget.
A. ― A demanding economy effort over the period 2013-2017.
B. ― A three-year budget for government priorities.
1. Funding for government priorities: education, youth, employment, justice and security.
2. Mobilizing all ministries to achieve savings to finance government priorities without increasing government spending.
III. ― Expenditures of compulsory basic social security schemes.
A. ― Mastering health insurance expenditures by ensuring the quality of care.
B. ― Adapting benefits to social needs in a continuous and concerted manner.
Annex 1: Methodological precision for the triennial budget.
Appendix 2: Key definitions.
Annex 3: Decomposition of change in structural balance by subsector.
Annex 4: Table of correspondence between the provisions of the draft organic law relating to the programming and governance of public finances and the attached report.
I. ― Macroeconomic context and overall strategy
A. ― Macroeconomic impact
1. Short-term outlook (2012-2013)
Public finance projections are based on a gross domestic product growth forecast of 0.3 per cent in 2012 and 0.8 per cent in 2013, on average annually.
The French economy, which is still convalescent, has seen its situation deteriorate significantly since the spring of 2011, due to a series of unfavourable international events, which have affected the exports and confidence of agents: the rise in the price of raw materials, especially oil, derived from the strong demand in emerging countries; the earthquake of Sendai; bad news about American growth; Finally, from August 2011, the exacerbation of tensions on debts and the slowdown in several countries in the euro area. The situation worsened in 2012 in a context of slowing global activity, Italy and Spain, particularly in recession.
In this context, growth is expected to be atone in France in 2012 (+0.3%) and will only experience a very progressive restarting the following year (+0.8% on average annually).
This scenario is based on the hypothesis of a gradual dissipation of financial tensions in the euro area and a gradual restarting of the global demand to France (+4.9% in 2013 after +.5% in 2012), which, coupled with the past depreciation of the euro, would result in a renewed dynamism of exports in 2013.
The recovery of domestic demand would follow the same schedule, in connection with improved household and business confidence. The recovery of growth prospects, the return of confidence with the control of public deficits, measures for the competitiveness of companies and the support for housing construction would allow private investment to restart and feed in return the resumption of activity.
The new directions for employment policy – creation of 100,000 jobs in the future in 2013, implementation of generation contracts, negotiation on job security – coupled with the progressive reboot of growth would allow the economy to reconnect with job creations in 2013. Emergency measures to support purchasing power—the boost to the SMIC, the increase in the school income allowance, the repeal of the VAT increase, the supervision of rents in tense areas, the decrease in fuel prices—will help to increase household consumption, especially the most modest.
The continued remediation of public finances would be based mainly on high incomes whose propensity to be spared is strong and on companies with manoeuvring margins. These adjustment measures will thus preserve private demand such as public demand, without weighing on productive supply.
The hazards surrounding this scenario remain important. It is based in particular on the hypothesis of a progressive resolution of tensions relating to the sovereign debts of certain members of the euro area. An increase in tension would affect growth. Conversely, following the concerted actions of States to support growth while continuing the consolidation of public finances, the European Council's June guidelines for a Banking Union, in parallel with the launch of broader work on the future of the Economic and Monetary Union, and the decisions of the European Central Bank, recovery could take place more quickly, leading to a more rapid return of confidence. This scenario is also based on the hypothesis of a stability in the price of oil and the exchange rate of the euro. A decline in energy prices would support the purchasing power, while a depreciation of the euro would improve the competitiveness-price of the countries of the area.
2. Medium-term outlook (2014-2017)
Public finance projections are based on an activity growth assumption of 2.0 per cent per year from 2014 to 2017.
This projection is based primarily on the potential growth of the economy in this direction, which is estimated at 1.6% per year by the Government. It is likely that the 2008-2009 recession has weakened potential growth, at least temporarily. However, it is still too early to determine whether this change is sustainable and the scenario is that of a return to potential growth a little less than that before the crisis.
After a negative shock during the crisis, productivity gains would have found a pace close to the one that prevailed before the crisis and would contribute to the potential growth of about 0.6 points per year on average. Similarly, companies recovering from investing, the contribution of capital accumulation to potential growth would gradually increase, reaching an average of approximately 0.6 points per year. Despite the retirement of baby boom generations, the working population would remain dynamic and contribute to the potential growth of about 0.3 points per year. Finally, the recovery of the labour market would reconnect with the tendential decline in the structural unemployment rate observed since the early 1990s, which had been interrupted by the crisis. This trend would contribute approximately 0.1 points per year on average to potential growth.
Under these conditions, the effective growth hypothesis of 2%, slightly higher than the potential, allows for a gradual reduction in activity deficit by 2017. In fact, the deficit in activity was very high in 2013: the actual GDP level would have dropped significantly from the potential GDP in 2008 and 2009, and again in 2012 and 2013. With the assumption on effective growth, the level of activity would thus be lower than its potential level in 2017: the growth assumption can therefore be considered prudent.
The recovery of growth in 2014-2017 could come from a positive contribution of foreign trade, in a context of global growth returned to its pace of pre-crisis, and the good maintenance of consumption through job creations, while public demand would be hampered by spending over time. The private payroll would increase by 4% per year, a little less than that of private value added.
In view of the uncertainty and dispersal of potential growth estimates (the European Commission considers that potential growth would be 1.1% per annum on average over the period 2010-2016, the Court of Auditors in its July 2012 report on the situation and prospects of public finances estimated it to be 1.4% as of 2012), the Government makes the choice, in this Financial Programming Act, of retaining a prudent conventional assumption of gradual recovery of the share
Main assumptions of the 2013-2017 macroeconomic scenario
(percentage)
| GDP | 1.7 | 0.3 | 0.8 | 2.0 | 2.0 | 2.0 | 2.0 |
| GDP deflator | 1.3 | 1.7 | 1.8 | 1.75 | 1.75 | 1.75 | 1.75 |
| Consumer price index | 2.1 | 2.0 | 1.8 | 1.75 | 1.75 | 1.75 | 1.75 |
| Private salary | 3.4 | 2.5 | 2.3 | 4.0 | 4.0 | 4.0 | 4.0 |
| Potential growth | 1.1 | 1.3 | 1.4 | 1.5 | 1.5 | 1.6 | 1.6 |
| Production gap (% of GDP) | 0.8 | 1.7 | 2.3 | 1.9 | ― 1.4 | ― 1.0 | 0.6 |
Evaluation by the European Commission
of the potential French growth
Potential GDP is the sustainable level of activity of the economy without tension on the factors of production (i.e., the level of growth that does not imply an increase in inflation). It makes it possible to distinguish what is within the structural economic factors and what is within the context of changes in economic activity. Potential growth is, however, not an observable data and must therefore be estimated. The various international organizations have quite a variety of assessments of the potential growth of countries, which testify to the uncertainty surrounding its estimate both on the past and on the forecast. The methods used are to estimate the future effect of the evolution of the factors of production (on the one hand, the work according to the working population, the rate of structural unemployment and the hours worked; on the other, the accumulation of capital through investment) and the overall productivity of these factors of production, which reflects technical progress.
In its spring 2012 forecast, the European Commission expects an average growth of + 1.1 per cent per year for France. Several factors explain the weakness of the European Commission's estimate:
― the methodology used by the Commission to assess the tendential active population does not allow to fully take into account the impact of age measures of pension reforms on the working population. In fact, in the medium term (2014-2016), the Commission uses a mechanical projection of the working population, resulting in an average deviation of approximately 0.2 points per year of potential GDP between 2012 and 2016 compared to a scenario incorporating the INSEE's labour population projections on which the Government's estimate is based;
― the Commission's method remains highly procyclical, including the estimation of tendancial productivity, structural unemployment and hours worked by head. In practice, the Commission's estimates tend to be strongly influenced by the changes in actual growth, even though the concept of potential growth is precisely intended to avoid these sometimes very clashed developments. Thus, on average for France, a 1 point revision of the actual growth forecast for two years leads to a revision of the Commission's potential growth of 0.3 point per year for five years. The Commission's estimate of potential growth is therefore very sensitive to the latest growth data observed: the crisis almost fully affects potential GDP.
The methodology for estimating potential growth used by the Commission is currently the subject of technical discussions at the European level, within the framework of a working group that has been mandated to determine a "transparent and scientifically robust" estimation method.
B. ― The trajectory of public finances
1. General medium-term strategy
Public Finance
The Government's objective is to reduce the share of debt in national wealth and to bring public accounts back to the structural balance in the medium term.
The multi-year programming of public finances described in this report makes it possible to distinguish two times in achieving this objective:
― the first time is that of the recovery of public accounts whose dynamics are now unsustainable, with the return of the nominal public deficit to 3% of the GDP and, as of 2014, the reversal of debt dynamics. For example, significant recovery measures were voted in July to secure the deficit target of 4.5% in 2012, taking into account the weak macroeconomic environment. A very important effort is still needed in 2013 to reduce the deficit to 3% in 2013, in line with the commitments of the President of the Republic;
―the second time will be that of the structural balance of public accounts, which will give margins of manoeuvre to public action. Thus, the structural deficit will be reduced below 0.5% of GDP in 2015, then to balance in 2016 and 2017. Continued spending control efforts, which will be carried out over the long term, will allow for margins to lower the mandatory levies rate that will ultimately undermine our growth potential.
Changes in public balance, public expenditure and mandatory sampling rates
(GDP points)
| Structural balance | 4.8 | 3.6 | ― 1.6 | 1.1 | 0.5 | 0.0 | 0.0 |
| Public balance | 5.2 | 4.5 | ― 3.0 | 2.2 | 1.3 | 0.6 | 0.3 |
| Ratio of public spending | 56.0 | 56.3 | 56.3 | 55.4 | 54.4 | 53.7 | 53.1 |
| Required sampling ratio | 43.9 | 44.9 | 46.3 | 46.3 | 46.2 | 46.2 | 45.9 |
| of which non-contentious PO ratio | 43.8 | 45.0 | 46.5 | 46.4 | 46.2 | 46.2 | 45.9 |
| Ratio of non-mandatory revenue | 7.2 | 7.1 | 7.2 | 7.2 | 7.2 | 7.2 | 7.2 |
A mastered change in public spending throughout the programming process to finance Government priorities
The expenditure effort will be maintained until 2017, allowing for a gradual decline in the share of public spending in GDP: its evolution in volume (excluding specific accounting elements, cf. infra) will be limited to 0.7% over the period 2013-2017 (excluding the additional savings of €10 million provided by the compact for growth, competitiveness and employment; 0.5% including these savings), significantly below its historical trend of just over 2%. This effort is shared between all actors. State spending and social security are supervised; participation in the expenditure effort of the operators and territorial authorities results in a decrease in the State's competitions, or taxes, which are assigned to them.
The public expenditure will be strictly controlled in 2013. The acceleration of the total expenditure in 2013 compared to 2012 (+0.9% after +0.4%) mainly reflects the accounting modalities in national accounts: the revenues of hertzian auctions, very high in 2012 (2.6 billion euros after 0.9 million euros in 2011) are recorded in lower expenditures. In addition, military expenditures are recorded in national accounts at the time of delivery and not at the time of payment, which can result in significant changes in public spending. Excluding these specific effects, volume expenditure increased by 0.5 per cent in 2013, as in 2012.
After 2013, the expenditure would increase at the rate of 0.7% (excluding the additional savings of €10 billion provided for in the compact for growth, competitiveness and employment; 0.5% including these savings), given the dynamism of interest charges with the expected incremental rise in interest rates (see box).
Public expenditure growth
| Public expenditure growth rate by volume | 0.4 per cent | 0.9 per cent | 0.4 per cent | 0.2% | 0.7 per cent | 0.8 per cent | 2.1 per cent |
| Public expenditure growth rate by volume (excluding military expenditures and microwave revenue) | 0.5 per cent | 0.5 per cent | 0.4 per cent | 0.2% | 0.7 per cent | 0.8 per cent | |
| Inflation off tobacco | 2.0 per cent | 1.75 per cent | 1.75 per cent | 1.75 per cent | 1.75 per cent | 1.75 per cent | |
Trends and interest rate assumptions
The rates on the issue of French sovereign debt recorded in recent months have been very favourable. As of September 20, 2012, the average rate weighted on the 2012 issue of short-term securities was 0.11% and that of medium- and long-term securities was 1.99%. These historically low levels are an improvement compared to the rates recorded in 2011, which were 0.81 per cent and 2.80 per cent respectively for medium and long term securities. This results from two main factors:
― thanks to the credibility of its fiscal policy and the resilience of its economy in the current phase of the cycle, France enjoys the confidence of international investors seeking quality securities to invest their liquidity in a slowing economic environment;
― the accommodating monetary policy of the ECB (including the two exceptional long-term refinancing operations, reductions in master rates, and the recent announcement of a program of "monetary transactions on a firm basis (1)" that significantly reduced the level of financial tension) and the decisions of the European Council in June benefited from the signing of France.
In this context, the rate assumptions for the years 2013 to 2017 in this programming law are cautious. Indeed, in a context of the outburst of sovereign debts, they are based on a scenario of normalization of monetary and financial markets that would result in the gradual upturn of short and long rates as of 2013. For example, the 10-year rate would average 2.9 per cent over the year 2013 and would continue to increase steadily by 25 basis points each year to an average of 4.15 per cent over the year 2017. For 2013, these rate assumptions are higher than market expectations (forward rates), the 10-year-old year-to-half-September rate at 2.6 per cent, and the economists forecast in the Forecast Consensus, with the 10-year rate expected at 2.7 per cent by the end of September 2013.
These assumptions lead to an increase in interest charges for all public administrations on the forecast horizon.
Primary balance and interest charges
(In gross domestic product points)
| Actual balance | 5.2 | 4.5 | ― 3.0 | 2.2 | 1.3 | 0.6 | 0.3 |
| Primary | 2.6 | 2.0 | 0.6 | 0.3 | 1.3 | 2.0 | 2.4 |
| Interest charges | 2.6 | 2.5 | 2.4 | 2.5 | 2.5 | 2.6 | 2.6 |
A fair distribution of mandatory sampling increases,
focused on the first two years of programming
While the spontaneous evolution of mandatory levies would be equal to that of GDP (unitary elasticity) throughout the forecast period, the stability of the mandatory levies ratio in 2014 and its decline from 2015 would reflect the progressive rise in the competitiveness and employment tax credit. New manoeuvring margins, allowed by the reorganization of public finances, will allow a new reflux of the mandatory sampling ratio in 2017.
New measures in mandatory sampling
(In Md€)
| New measures in mandatory sampling | 21 | 20 | 30 | 1 | ― 3 | ― 1 | ― 6 |
| MN for the LPFP counter (excluding competitiveness) | 0 | 7 | 24 | 0 | ― 1 | ― 3 | 7 |
| Competitiveness | 0 | 0 | 0 | 4 | ― 6 | 0 | 0 |
| Litigation | 1 | ― 3 | ― 3 | 3 | 2 | 0 | 0 |
| Other | 20 | 16 | 9 | 1 | 2 | 2 | 1 |
| Elasticity of mandatory sampling (except EU) | 1.2 | 1.0 | 1.0 | 1.0 | 1.0 | 1.0 | 1.0 |
New measures within the meaning of this Act
of programming
Section 13 of the proposed programming legislation stated: "The impact, valued at a given year in relation to the situation of the previous year, of the measures adopted by Parliament or taken by the Government by regulation as of 1 July 2012 and related to the mandatory samplings referred to in the report provided for inArticle 52 of Organic Law No. 2001-692 of 1 August 2001 relating to financial laws, cannot be less than the amounts shown below, expressed in billions of euros:
| 7 | 24 | ― 3 | 7 | ― 3 | 7 |
New sampling counter
2012-2013 PSL
(In Md€)
| Measures LFR II 2012 | 7 | 5 |
| 2013 PLF and PLFSS measures | 0 | 19 |
| Total counter | 7 | 24 |
Required samples
The recording in national accounts of several series of tax litigations is likely to have an impact, all of which is equal, on the public balance. This is:
– refunds to foreign UCITS;
- repayments under the movable pre-payment;
– litigation concerning electronic communications tax.
In national accounts, expenditures and revenues are recorded on the basis of the fees found (2). Therefore, the impact of litigation is recorded in the year a final court decision is rendered (3). Thus, the annual cost to the State of these court decisions is not permanent and the disbursement schedule cannot be specified, which pleads to isolate them as temporary effects on the public balance.
Hypothesis in tax litigation programming
(In Md€)
| Advance | 0.2 | 1.8 | 0 | 0 | 0 | 0 |
| Contentious OPCVM | 1.5 | 1.8 | 1.8 | 0 | 0 | 0 |
| Electronic communications tax | 0 | 1.3 | 0 | 0 | 0 | 0 |
| Total | 1.7 | 4.9 | 1.8 | 0 | 0 | 0 |
| Note. ― The inclusion of the figures in this table does not prejudge the outcome of litigation, but reflects a willingness to be cautious in multi-year fiscal projections. In addition, the figures shown are likely to change with final court decisions. | ||||||
2. Changes in structural balance
Public Administration
Structural balance, which is the medium-term objective of France in the sense of the Stability and Growth Pact and the Treaty on Stability, Coordination and Governance, would be achieved in 2016.
In 2013, the structural adjustment will be historically high (+2.0 points), much higher, in particular, than that made in 2012 (+ 1.2 points). This adjustment is mainly the result of the measures voted in the Second Corrigendum Finance Act for 2012 and those included in the 2013 financial bills. It will ensure a 1.5-point reduction in the nominal deficit despite the impact of growth still below the potential growth that digs the 0.3-point conjuncture deficit and the increase in the cost of litigation on mandatory levies (up to € 3.2 million) (4).
Actual and structural balance of public administration
(In gross domestic product points)
| Public balance | 5.2 | 4.5 | ― 3.0 | 2.2 | 1.3 | 0.6 | 0.3 |
| Business balance | 0.4 | 0.8 | 1.2 | ― 1.0 | 0.8 | 0.5 | 0.3 |
| Ad hoc and temporary measures (% of potential GDP) | 0.1 | 0.1 | 0.2 | 0.1 | 0.0 | 0.0 | 0.0 |
| Structural balance (% of potential GDP) | 4.8 | 3.6 | ― 1.6 | 1.1 | 0.5 | 0.0 | 0.0 |
| Change in structural balance | 1.5 | 1.2 | 2.0 | 0.6 | 0.6 | 0.5 | 0.1 |
| Note. ― Point and temporary measures are excluded from the structural balance in accordance with the European methodology. During this period, they correspond to tax litigation (see box). | |||||||
Between 2014 and 2016, the structural adjustment will continue at an average rate of 0.5 points per year, reflecting continued efforts to control public spending, until the medium-term equilibrium objective is reached. With GDP growth (2.0 per cent in volume) higher than potential growth, the economic deficit will decrease by an average of 0.2 points, allowing a total reduction of the deficit of 3/4 point of GDP per year on average, leading to a public balance to the strict structural balance in 2016, which would be maintained in 2017.
This trajectory respects France's European commitments on its actual and structural deficit path:
― the ECOFIN Council's recommendation of 2 December 2009, which called on France to reduce the deficit below the threshold of 3.0 per cent of GDP in 2013 and to undertake a structural adjustment of at least 4 points of GDP in the period 2010-2013: the measures taken to meet nominal deficit targets in 2012 and 2013 while the economic situation is much more degraded than expected in the end of 2009 lead to a very much higher adjustment to this deficit
– the rules of the preventive part of the Stability and Growth Pact, which impose a minimum structural adjustment of 0.5 points of GDP per year from the outset of the excessive deficit procedure (i.e., the return to a public deficit of less than 3.0% of the GDP, i.e. 2013 for France) and to the return to the medium-term objective.
3. Debt trajectory (balance to stabilizer balance, flow
and reference to the European debt rule
Between 2007 and 2011, the public debt ratio (excluding financial support to the euro zone) rose by 21 points, an unprecedented increase since the post-war period, as a result of the 2008-09 recession, but also of high recurring structural deficits.
Public debt trajectory
(In % of GDP)
| Debt ratio in the direction of Maastricht | 86.0 | 89.9 | 91.3 | 90.5 | 88.5 | 85.8 | 82,9 |
| Debt ratio excluding financial support to the euro area | 85.3 | 87.4 | 88.4 | 87.3 | 85.4 | 82,9 | 80.1 |
| nominal GDP growth (%) | 3.1 | 2.0 | 2.6 | 3.8 | 3.8 | 3.8 | 3.8 |
| Stabilizing balance | 2.7 | 2.9 | 0.8 | 1.2 | 2.0 | 2.6 | 2.9 |
| Actual public balance | 5.2 | 4.5 | ― 3.0 | 2.2 | 1.3 | 0.6 | 0.3 |
| Balance stabilizing the debt ratio | 2.4 | 1.7 | 2.3 | - 3.3 | - 3.3 | 3.2 | - 3.1 |
| Debt flows | 0.9 | 1.0 | 0.7 | 0.3 | 0.0 | 0.1 | 0.0 |
| Financial support to the euro area | 0.5 | 1.8 | 0.5 | 0.3 | 0.0 | 0.1 | 0.0 |
| Variation in debt ration | 3.7 | 3.9 | 1.5 | 0.8 | 2.0 | 2.7 | 2.9 |
Financial support to the euro area (degree to the central account)
(In Md €)
| Debt in the sense of Maastricht (cumul) | 4.4 | 144.5 | 50.3 | 61.7 | 68,8 | 68,8 | 67,5 | 67,5 |
| Greece (bilateral loans) | 4.4 | 11.4 | 11.4 | 11.4 | 11.4 | 11.4 | 11.4 | 11.4 |
| Dont Greece via FESF | | | 24,6 | 28.3 | 31.6 | 31.6 | 31.6 | 31.6 |
| Dont Ireland via FESF | | 1.6 | 3.4 | 3.8 | 3.8 | 3.8 | 3.1 | 3.1 |
| Dont Portugal via FESF | | 1.5 | 4.4 | 5.1 | 5.7 | 5.7 | 5.2 | 5.2 |
| EMIS capital endowment | | | 6.5 | 13.0 | 16.3 | 16.3 | 16.3 | 16.3 |
This trajectory allows compliance with the debt criterion of the correct portion of the Stability and Growth Pact. This criterion, which is now in addition to the deficit criterion for the implementation or exit of an excessive public deficit (GDP) procedure, aims to ensure a speedy return of the debt ratio to the threshold of 60% of GDP, for countries with a debt rate of more than 60% of GDP.
More specifically, the Regulation on the Corrective Component of the amended pact under the "six-pack" (6) provides a reduction at an average rate of one twentieth per year, over three years, from the difference in the debt ratio to 60%.
However, for countries currently in DPE procedure, such as France, a three-year transition period is foreseen after the end of the procedure (2013 for France), during which the debt criterion will not apply, but where it will be up to the State concerned to show that this criterion will be met from its first year of effective entry into force. In this context, France's public finance trajectory will allow compliance from 2016. Given France's level of public debt, an average drop in the order of 1.5 points per year is required to meet the criterion; However, the average drop between the end of 2013 and the end of 2017 is 2 points per year. Indeed, the return path to the structural balance of medium-term public finances ensures a balance well above the level stabilizing the debt (which, with nominal growth at 3.75 per cent, is in the order of ― 3% of GDP).
C. ― Public finance trajectory: analysis
of the overall recovery effort
Projection to " unchanged policy" within the meaning of the European Directive on Budgetary Frameworks
This report presents a "spontaneous" deficit trajectory given the spontaneous rate of growth of public revenues, sick spending and state spending. Specifically, on the revenue side, this scenario incorporates the spontaneous evolution, the function of the economic environment and elasticities to the taxable bases observed in the past, the usually observed changes in local tax rates according to the electoral cycle, as well as tax indexes (such as the minimum increase in contribution to the public service of electricity provided by law, for example). In addition, the effects (possibly multi-year) of the measures already passed in all laws that have an impact on public finances, in particular the financial laws (up to the LFR voted in July 2012). On the other hand, new revenue measures are not taken into account in the context of the Finance Bill and the Social Security Financing Bill for the year 2013 and in the Multi-year Programming Act 2012-2017. In terms of expenses, the spontaneous changes in the benefits (malaria, pensions, family benefits etc.) due to indexation rules or demography. The trajectory also includes regular behaviours (e.g., the local electoral cycle that influences investment expenditures), as well as the spontaneous dynamism of State spending and health insurance without the application of budgetary standards. Without the Government's efforts and described in this programming law, the deficit would remain above 3.0 per cent of GDP until 2017.
In addition, this report presents, in accordance with the Directive of the Council of the European Union of 8 November 2011 on the requirements for the budgetary frameworks of the Member States, a scenario "at the same level of legislation and budgetary practice". This scenario holds the same conventions on income side but differs on expenditure side. In fact, the multi-year programming law includes ambitious spending targets that will be ensured through stabilization in value of government spending and the moderate progress of the National Health Insurance Objective (ONDAM), and which have proven to be effective instruments for spending control. According to the terminology of the European Commission, the stabilization in value of State spending and the progression of the NDAM limited to 2.6 per cent on average in 2013-2017 is considered to be achieved, "at the same level of legislation and budgetary practice".
Decomposition of the trend and fiscal practice scenario unchanged
(In gross domestic product points)
| Trend scenario | 4.5 | 4.5 | ― 4.0 | 3.6 | 3.2 | ― 3.0 |
| Expenditure measures | 0.0 | 0.6 | 1.1 | 1.5 | 2.0 | 2.4 |
| NDAM's inflection of 4.1% (excluding measures of complementary economies of the compact for competitiveness, growth and employment) | | 0.1 | 0.2 | 0.4 | 0.5 | 0.6 |
| Including inflexion on the expenses of the State (excluding additional measures PSA) | | 0.5 | 0.8 | 1.2 | 1.5 | 1.7 |
| Fiscal practice scenario unchanged, before PLF 2013 | 4.5 | 3.9 | ― 3.0 | 2.0 | 1.2 | 0.6 |
| Revenue measures (including competitiveness, growth and employment pact) | 0.0 | 0.9 | 0.7 | 0.3 | 0.2 | 0.1 |
| Additional savings in expenses of the compact for competitiveness, growth and employment | | | 0.2 | 0.4 | 0.4 | 0.4 |
| Target line | 4.5 | ― 3.0 | 2.2 | 1.3 | 0.6 | 0.3 |
| For 2012, the unchanged policy scenario resulted in a 4.5% deficit, identical to the target trajectory, with all of the spending and revenue measures already adopted. For the year 2013, the trend scenario shows a need for a 1.5 point-of-GDP adjustment with the target of 3%, which is covered for one third by a reduction in spending and for two thirds by revenue increases. The effort is focused on the period 2014-2017 between the tendancial scenario and the target trajectory, but the composition of this sharing is changing over time as the expenditure measures that are gradually in charge will eventually reduce the mandatory sampling. | ||||||
1. Impact of recovery measures
Cost recovery measures are detailed in Parts II (State) and III (Social Security).
Revenue measures will be concentrated over the first two years, their impact will reach its high point in 2013, and then decline from 2014. In 2013, the 2013 PLF and PLFSS revenue recovery measures improve the public balance by €20 billion.
Impact of revenue measures
PLF and PLFSS for 2013
(a) The impact on state revenues
Thus, the measures announced under the 2013 Finance Bill will improve the return of state net tax revenues by more than €15 billion.
Additional mandatory household levies, consistent with the approach already pursued in the second rectificative finance law for 2012, are a fair and shared effort among taxpayers, including by strengthening the progressivity of income tax.
As such, the wealthiest households will be more sought: the income fraction of more than €150,000 will now be taxed under income tax to 45% (reward of €0.3 million) and the income of more than €1,000 000 will be taxed to a total of 75% for business income (reward of €0.2 million). In addition, the restoration of the solidarity tax scale on the existing fortune before the 2011 tax reform will lead to a significant increase in this tax. The income tax will be reformed so that the income of capital and labour income will be subject to the same progressive scale (+€3.0 Md), while preserving the contributive capacities of each one: thus, the maximum benefit of the family quotient will be reduced to €2,000 (+€ 0.5 Md) in order to make the device more redistributive and, on the other hand, the denomination applicable to the income tax on the
Mandatory corporate levies will limit existing tax optimization opportunities while preserving the economic growth potential. In this context, the adjustment of the deductibility of borrowing interests will help to correct the current fiscal bias that can motivate companies to finance themselves by debt rather than by equity. Similarly, the change in the terms and conditions for calculating the share of costs and expenses will strengthen the link between the taxable share, on the one hand, and the amount of the deductible expenses and expenses relating to the assigned and exempted shares, on the other hand. Finally, the introduction of a "minimum tax" by limiting the imputation of deficits, ensuring that the tax will apply, for large businesses, to 50% of the taxable profits of the fiscal year. Two other measures will complement this business component that will contribute to the reorganization of public accounts: the modification of the corporate tax-account plan applicable to large corporations, on the one hand, and the taxation of amounts placed in reserve of capitalization of insurance companies, an exceptional measure, on the other.
Finally, other provisions, which are part of more comprehensive sectoral reforms, will improve the balance of the State: these are notably the measures presented in the context of the reform of the housing market (+ €0.10 billion for the State, in particular thanks to the strengthening of the tax on vacant housing), as well as the modifications made to the environmental tax (+€0.2 million for the State through the development of the general tax on the bonuses on The housing measures will also create a supply shock increasing the flow of housing transfers and thus tax plates.
(b) Impact on revenues
Social Security Administrations (ASSO)
The Social Security Financing Bill for 2013 will improve the balance of social security administrations by almost €5 million. Some of these measures will enhance the incentive of social taxation by strengthening the taxation of risk behaviours (tabagism, alcoholic beverages). Other measures continue the goal of reducing tax and social niches (e.g., removing the lump sum plate for services to the person). Others will strengthen the fairness of the collection between the different forms of remuneration (independent, carried interest). Finally, sampling increases will improve funding for certain special plans (CNAVPL, CNRACL).
2. Structural balance decomposition
and structural effort
The structural adjustment underlying the trajectory programmed in this Programming Law is essentially a reflection of structural efforts (see definitions in Appendix 2), as the non-discretionary component of the structural adjustment is generally neutral over the period 2012-2017: it would be negative in 2012 ( – 0.3 point of GDP) reflecting an overreaction of the mandatory levies to the net slowdown of activity in 2012 and a decrease in the share of revenues out of it would, however, be slightly positive later (+ 0.1 point per year).
Evolution of Structural Effort (APU)
(In % of GDP)
| Public balance | 5.2 | 4.5 | ― 3.0 | 2.2 | 1.3 | 0.6 | 0.3 |
| Structural balance | 4.8 | 3.6 | ― 1.6 | 1.1 | 0.5 | 0.0 | 0.0 |
| Change in structural balance | 1.5 | 1.2 | 2.0 | 0.6 | 0.6 | 0.5 | 0.1 |
| Structural effort | 1.2 | 1.4 | 1.9 | 0.5 | 0.5 | 0.4 | 0.1 |
| New PO measures | 1.0 | 1.1 | 1.6 | 0.1 | 0.2 | 0.0 | 0.3 |
| Expenditure | 0.2 | 0.3 | 0.3 | 0.6 | 0.7 | 0.4 | 0.4 |
| Non-discretionary component | 0.4 | 0.3 | 0.1 | 0.1 | 0.1 | 0.1 | 0.0 |
The revenue effort is concentrated at the beginning of the period (1.6 points of GDP new measures in 2013 after 1.1 points in 2012), mainly due to the significant new mandatory sampling measures decided in the summer collective 2012 and the 2013 finance and social security finance bills, to secure the target of 4.5 per cent in 2012 and to reach the target of 3% in 2013. Over the period 2014-2016, the new measures integrated in the trajectory, excluding the measures of the Pact for Growth, Competitiveness and Employment, do not exceed 0.1 points of GDP and correspond to the multi-year effects of measures already in force (e.g., increase in premiums for the expansion of long-term careers), to increases outside the PLF/PLFSS field (increase in local tax rates or increased public contribution
The expenditure effort is spread throughout the course, on average 0.4 points of GDP per year, excluding the measures of the compact for growth, competitiveness and employment, including through the control of the expenditure allowed by stabilization in value of the expenditures of the non-debt and pension state and the objective of health insurance expenditures. In addition to these spending standards, the efforts of State operators, whose operational and operating expenses are contained over the entire period, as well as the expected control of local government spending (see below).
The expenditure rule of the preventive portion of the Stability and Growth Pact: a variation of the structural effort that excludes interest charges
According to the rise of public expenditure rule now included in the preventive portion of the Stability and Growth Pact, the volume growth of the expenditure of public administrations, net of new revenue measures, and excluding interest charges and unemployment expenses, must, according to the country's position in relation to its medium-term objective (MTO), "not exceed a reference rate [or a lower rate for countries that have not reached their GTOs]
This rule, which is part of a global assessment that refers to the structural balance, allows to focus on the components directly controlled by the legislator within the structural adjustment: non-interest expense expenditure and new revenue measures.
It therefore corresponds to a notion of structural effort similar to that presented above, the only difference relating to the exclusion of interest charges.
It is presented differently, however, in the form of a net expenditure growth rate of new revenue measures to be compared to a medium-term reference GDP growth rate.
Compliance with this preventive component rule is precisely appreciated by the European Commission as follows:
– the field is the public spending of public administrations, excluding interest charges and economic spending of unemployment, and net of new revenue measures. In addition, investment, which may be a particularly volatile component of expenditure, especially for small countries, is smoothed over a three-year period;
― public spending in volume is calculated using as a deflator the price of GDP;
– the growth rate of the reference GDP should be an average of ten years of the potential growth rate;
― the rule imposes on net-volume expenditure new measures to grow at a lower rate than this GDP growth of reference with, for countries that have not reached their MTOs, a gap allowing a structural adjustment of 0.5 points per year.
For France, taking as a reference growth the average potential growth in programming between 2014 and 2017, and in view of the level of primary expenditures (i.e. excluding interest charges) in GDP, the rate of growth in volume expenditure, net of new measures, consistent with a structural adjustment of 0.5% would be 0.6%. Once the TTO reaches, the growth of the compatible expenditure to remain will be the potential growth.
This would be followed by France, with a net increase in expenditure (excluding interest charges) of new revenue measures of 0.4% on 2014-2016, ensuring a contribution of approximately 0.6 points to structural adjustment. This contribution is slightly higher than the structural effort presented above, the exclusion of interest charges, dynamic over the period as a result of the selected interest rate scenario, accentuating the expenditure effort.
You can consult the table in the
JOn° 1 of 01/01/2013 text number 2
D. ― The trajectory of public finances:
Subsector analysis
Introductory note:
This section presents changes in expenditures and revenues of public administrations without competitiveness measures.
Competitiveness measures impact the trajectory as follows:
| Public expenditure (*) | 4 | ― 10 | ― 10 | 11 |
| Mandatory removals (impact state alone) | 4 | ― 10 | ― 10 | 11 |
| (*) Savings in public spending will be disaggregated between subsectors of public administrations as part of the public policy modernization approach to which Parliament will be associated. | ||||
Capacity (+)/need (–) of public administration funding
(In % of GDP)
| Public administration | 5.2 | 4.5 | ― 3.0 | 2.2 | 1.3 | 0.6 | 0.3 |
| State | 4.4 | - 3.7 | 2.5 | 2.0 | 1.5 | 1.2 | ― 1.0 |
| Various central administration organizations | 0.1 | 0.2 | 0.2 | 0.1 | 0.0 | 0.0 | 0.1 |
| Local public administration | 0.0 | 0.1 | 0.1 | 0.1 | 0.0 | 0.1 | 0.1 |
| Social security administration | 0.6 | 0.5 | 0.2 | 0.0 | 0.3 | 0.6 | 0.8 |
The reduction in the deficit between 2012 and 2017 would be allowed in the first place by an expenditure control effort whose growth would average 0.7 per cent in volume over that period. This effort would be shared by all sub-sectors: almost stable spending by volume of central government (state and various central government agencies), average expenditure growth of 0.7 per cent of local government and that of social security administrations of about 1% in volume, significantly below potential growth.
Evolution of public expenditure by volume, including transfers
| Public administration (including competitiveness) | 0.4 per cent | 0.9 per cent | 0.4 per cent | 0.2% | 0.7 per cent | 0.8 per cent | 0.5 per cent |
| Subsector decomposition of the compact for growth, competitiveness and employment | |||||||
| Public administration | 0.4 per cent | 0.9 per cent | 0.7 per cent | 0.7 per cent | 0.7 per cent | 0.8 per cent | 0.7 per cent |
| Central public administration | 0.5% | 0.3 per cent | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% |
| Local public administration (APUL) | 0.4 per cent | 0.8 per cent | 0.5 per cent | 0.2% | 0.8 per cent | 1.4 per cent | 0.7 per cent |
| Social Security Administrations | 0.8 per cent | 1.1 per cent | 1.1 per cent | 1.1 per cent | 1.0% | 1.2 % | 1.1 per cent |
| (Hors military expenditures, hertzian frequency revenues) | |||||||
| Public administration | 0.5 per cent | 0.5 per cent | 0.7 per cent | 0.7 per cent | 0.7 per cent | 0.8 per cent | 0.7 per cent |
| Central public administration | 0.4% | 0.5% | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% |
| Local public administration (APUL) | 0.4 per cent | 0.8 per cent | 0.5 per cent | 0.2% | 0.8 per cent | 1.4 per cent | 0.7 per cent |
| Social Security Administrations | 0.8 per cent | 1.1 per cent | 1.1 per cent | 1.1 per cent | 1.0% | 1.2 % | 1.1 per cent |
| (*) This is the average annual progression. | |||||||
1. The trajectory of the State
State
(In gross domestic product points)
| Expenditure | 20.8 | 20.5 | 20.4 | 19.9 | 19.5 | 19.1 | 18.6 |
| Income | 16.4 | 16.9 | 17,8 | 17,9 | 18.0 | 17,9 | 17.6 |
| Balance | 4.4 | - 3.7 | 2.5 | 2.0 | 1.5 | 1.2 | ― 1.0 |
| Balance in Md€ | - 87.5 | ― 75.0 | - 52.9 | 44.3 | - 34,5 | ―28.2 | - 25,0 |
The reduction in the state's balance would be 2.7 points between 2012 and 2017, bringing its deficit to 1.0% of GDP in 2017. This reduction in the deficit would be particularly marked in 2012 and 2013 (with a change in its respective share of 0.7 GDP points and 1.1 GDP points). This reduction would continue at a more moderate rate between 2014 and 2017 (with an average annual change in the public balance of 0.4 points of GDP).
The multi-year trajectory for the State is marked by a mastery of spending throughout the programming period that allows to limit the weight of State spending in GDP, while revenues would experience a concentrated increase at the beginning of the period before stabilizing from 2014 to 2017. The State's deficit in national accounts would decrease in the 2011-2017 period, from €87.5 million in 2011 to €25.0 billion in 2017. The budget deficit would follow the same trend (see the key to the transition between the balance in budgetary accounting and the balance in national accounts).
Budgetary balance
| Perimeter of the narrow "zero value" standard | 279.4 | 27.5 | 27.5 | 27.5 | 27.5 |
| BG expenditure + revenue | 374,6 | 372,4 | 373.8 | 378,6 | 382,1 |
| General budget expenditure | 298,5 | 297.0 | 298.4 | 302,3 | 304.9 |
| Receipts (PSR) | 76.1 | 75.3 | 75,5 | 76.3 | 77.2 |
| Net tax revenues | 298,6 | 309.4 | 323.8 | 334.2 | 340.2 |
| Non-tax revenues | 14.2 | 14,7 | 15.3 | 15.9 | 16.6 |
| CST balance (excluding IMF) | 0.3 | 0.7 | 0.7 | 0.8 | 0.8 |
| Budgetary balance | ― 61.5 | 47.6 | - 33.9 | 27.7 | - 24.5 |
| Crossing key | 8.5 | 3.2 | 0.5 | 0.5 | 0.5 |
| State balance in national accounts | - 52.9 | 44.3 | - 34,5 | ―28.2 | - 25,0 |
State transit key
CN and State budget balances
(In Md€)
| National accounts balance | - 87.5 | ― 75.0 | - 52.9 | 44.3 | - 34,5 | ―28.2 | - 25,0 |
| Budgetary balance | - 90.7 | 86.1 | ― 61.5 | 47.6 | - 33.9 | 27.7 | - 24.5 |
| Associated key | 3.2 | 11.2 | 8.5 | 3.2 | 0.5 | 0.5 | 0.5 |
The key between the state's balance in budgetary accounting and the state's balance in national accounts would be very positive over the period 2012-2014 (around €8.5 million in 2013, then €3.2 million in 2014) before becoming negative over the period 2015-2017, around €0.5 million.
Indeed, operations in the framework of aid to the countries of the euro area (bilateral loans to the Member States, allocations to the ESM) as well as the allocation to the European Investment Bank (EIB), which are budget accounting expenditures, are not considered national accounts expenditures. They are registered in financial transactions and therefore do not impact the public deficit in national accounts as they do not lead to financial depletion of public administrations. The last allocation to the ESM is scheduled in 2014, there would be no impact on the key as of 2015.
In addition, premiums and denominations on the issue would reduce the deficit in national accounts at the beginning of the period. They reflect the differences between the emission value and the refund value of the securities. When emissions occur on older strains whose interest rates are higher than the market rate, the emission value is higher than the repayment value and the cash gain (not recorded as a budget) is spread out by the national accounts on the duration of the loan, resulting in a positive transition key. This effect would gradually fade over the forecast period as the stock of obligations was exhausted.
Once these effects are dissipated, the key should be slightly negative under conventional assumptions, including:
- private public partnerships, which are registered in national accounts at the time of delivery of the property and not the payment of rents. In view of the uncertainty regarding the amounts, a constant key hypothesis at €0.5 million was retained;
– military expenditures that are recorded at the time of delivery in national accounts and not as payment (neutral key assumption for 2014-2017).
Finally, a portion of the expenses of the large loan (including funds from the Caisse des dépôts et consignations) is directly attached to the State in national accounts and will therefore increase the state deficit in national accounts, over the entire programming period.
2. Trajectory of various central administration bodies
(In gross domestic product points)
| Expenditure | 4.1 | 4.1 | 4.2 | 4.1 | 4.0 | 3.9 | 3.9 |
| Income | 4.0 | 3.9 | 4.0 | 4.0 | 4.0 | 3.9 | 3.8 |
| Balance | 0.1 | 0.2 | 0.2 | 0.1 | 0.0 | 0.0 | 0.1 |
| Balance in Md€ | 2.7 | 4.8 | - 3.3 | 1.9 | 0.9 | 0.7 | 2.1 |
Various central government organizations (CFOs) would maintain a slight deficit over the forecast period. The average revenues and expenditures of ODAC are thus from 2014-2017 to 3.9% and 4.0% of GDP respectively. The balance reached in 2017 is therefore expected at € 2.1 billion.
The ODAC deficit would reflect future investment expenditures (progressive consumption of transfers received in 2010). Other ODACs would generally be close to balance, which was forced in particular by the prohibition to end (8) with a credit institution for a term of more than twelve months. In addition, State operators will respect a principle of parity with the standards that the state imposes on its own expenses.
In terms of revenues, the decline in their share in GDP is a reflection of less resources made by the state (subsidies and taxes affected). On the other hand, mandatory levies would progress slightly as a result of the increase in the heavyweight tax in 2013 and 2014 (for the benefit of the Agence de financement des infrastructures de transport de France [AFITF]) and the increase in the contribution to the public service of electricity (CSPE) in order to gradually repay the accumulated deficit.
3. Trajectory of social security administrations
(In gross domestic product points)
| Expenditure | 26,6 | 26.9 | 26.9 | 26,7 | 26.5 | 26,2 | 26.0 |
| Income | 26.0 | 26,4 | 26,7 | 26,7 | 26,8 | 26,8 | 26,8 |
| Balance | 0.6 | 0.5 | 0.2 | 0.0 | 0.3 | 0.6 | 0.8 |
| Balance in Md€ | 12.7 | 10.4 | 4.8 | 0.7 | 6.4 | 12.9 | 18.8 |
| Outstanding balance | 1.2 | ― 1.0 | 0.8 | 0.5 | 0.3 | 0.0 | 0.2 |
| Balance off CADES-FRR (Md€) | ― 23.0 | 20.8 | 15.9 | 0.9 | 5.9 | 0.1 | 5.3 |
Social security administrations (which include, in addition to the general regime, the complementary regimes, the Unédic, the special regimes, the independent regimes and various funds – including CADES and the FRR) would also see their balance improved significantly, from a deficit of 0.5 point of GDP in 2012 to a surplus of 0.8 point of GDP. The forecast surplus would mainly reflect the structural surplus balance of the CADES-FRR (0.5 point of GDP in 2012 and 0.6 point of GDP in 2017).
This improvement is explained first by the expenditure control efforts. In fact, social security administrations, which have a large share of public spending (47 per cent in 2011, excluding transfers to other subsectors), will see their controlled spending (volume growth of 1.1 per cent over the period 2012-2017), notably due to a national health insurance expenditure target of 2.7 per cent in 2013, 2.6 per cent in 2014 and 2.5 per cent in value starting in 2015. The recovery of economic activity will also allow for a drop in the volume of unemployment expenses.
Revenues from social security administrations will benefit from the recovery of the private payroll (+4%/year) on which a large portion of the revenues from social security administrations are based. The spontaneous evolution of other taxes and taxes would be identical to that of GDP in value (3.75 per cent). As with the central government, the new measures in mandatory removals from social administrations will be concentrated in 2012 and 2013, with the 2013 ones due half to the 2013 financial and social security bills for 2013, and half to the second bill of Corrigendum Finance 2012. Subsequently, the new measures are consistent with the effects of measures already in place, as is the case for the expansion of the long-term early retirement scheme, whose effects are spread until 2016. Overall, the ratio of revenue to GDP will be stabilized in 2013.
4. Local government trajectory
(In gross domestic product points)
| Expenditure | 11.7 | 11.8 | 11.8 | 11.6 | 11.4 | 11.3 | 11.2 |
| Income | 11.7 | 11.7 | 11.7 | 11.6 | 11.4 | 11.4 | 11.3 |
| Balance | 0.0 | 0.1 | 0.1 | 0.1 | 0.0 | 0.1 | 0.1 |
| Balance in Md€ | 0.9 | 2.1 | 2.1 | ― 1.4 | 0.3 | 2.4 | 1.6 |
Local government would maintain a balance close to balance over the entire period.
Revenues from local government would increase at a rate a little lower than the activity, despite increases in local direct tax rates in connection with the electoral cycle (up $0.8 billion/year on average between 2014-2017 after the 2014 elections), due in particular to the decline in the state's financial competitions (excluding FCTVA) in 2014 and 2015. The spontaneous evolution of mandatory local government levies would be close to that of GDP over the entire period. In 2012, the expected decline in transfer fees on a free basis (DMTO), a reflection of transaction volumes on the former real estate market, in fact, would be compensated by the dynamism of local direct tax revenues, with sustained growth in rental bases. In 2013, the spontaneous evolution would be a bit higher than the unit in 2013 (rebound of the DMTO due to the shock of supply on the real estate market that would be driven by the measures of the finance bill on housing taxation). Subsequently, elasticity very slightly less than unity is retained, especially with conventionally increasing DMTOs such as GDP.
In this context, local governments would continue their spending efforts against pre-crisis electoral cycles. Thus, the increase in local spending would remain moderate (+0.7% in volume). The payroll would grow at a rate of 2.5% in value. The most dynamic expenses would be the expense of interest, in connection with the progressive rise of rates, today at a historically low level, and social spending (especially the loss of autonomy allocation and benefits for the nursery), with the exception of the expenditures related to the RSA that would decelerate with the progressive improvement of the economic situation. The investment cycle would explain the profile of local spending with a slowdown from 2014, the year of municipal elections (2014) and a gradual acceleration in 2016 and 2017. On average over the period 2012-2017, the increase in investment would remain moderate (+2.2% per year).
Participation of local authorities
the recovery effort
Territorial authorities participate in the effort to correct public accounts in accordance with the free administration of each. The main directions are:
1. The envelope of State financial competitions to territorial authorities was stabilized in 2013 and will decrease by 750 million euros per year, in 2014 and 2015.
The envelope includes:
― State revenue levies established for the benefit of the territorial authorities, with the exception of the Value-Added Tax Compensation Fund and compensation endowments for the reform of the professional tax;
– the "Re Relations with Territorial Communities" mission, except for the various grants for general interest and the operational credits of the DGCL;
- the general decentralization staffing of vocational training.
In 2013, the envelope of State competitions to territorial authorities was stabilized at a constant perimeter, compared to 2012, amounting to €50.5 million. It will decrease by 750 million euros per year in 2014 and 2015, an average of 1.4 per cent per year over 2014-15.
2. The involvement of local authorities in the recovery effort should be reconciled with the equalization imperative.
Indeed, there are currently significant disparities in the financial situation of local authorities, mainly linked to the resource gap, particularly at the municipal level.
The fair recovery effort is based on the principle that those who can most must contribute the most. Enhancing equalization will therefore allow more participation by the most endowed communities.
The Government proposes to strengthen the equalization effort in 2013 both on:
– the vertical equalization (via the state's endowments to the territorial authorities). Thus, the DGF's Equalization Endowments will increase by €238 million in 2013 compared to the amounts paid in 2012, i.e. a double of the rate of increase found in the original finance law for 2012 (+€119 million in 2012);
– the horizontal equalization (i.e. between territorial authorities). PLF 2013 proposes an adjustment of the methods for the removal and repayment of the FPIC (Fonds de Equalization des ressources intercommunales et communales) and the FSRIF (Fonds de solidarité des communes de la région d'Ile-de-France) to ensure a better distribution and operation of these funds. It also profoundly alters the operation of the contribution Equalization Funds on the value added of the departments and regions.
3. Starting in 2014, the terms of association of territorial authorities will be negotiated as part of a trust and solidarity pact.
A confidence-building and solidarity pact will be negotiated with local authorities to determine the modalities, starting in 2014, of territorial communities' participation in the recovery effort.
II. - The three-year state budget
A. ― A demanding economy effort
2013-2017 period
The State will take its full part in the recovery of public accounts. Indeed, over the period 2013-2017, no additional euro will be spent in relation to the parliamentary authorization of the IFA 2012, on all expenses, excluding debt charges and pensions.
Over the programming period, this discipline allows a change in the total expenditure of the state (including debt burden and pensions) very lower than inflation: the evolution is indeed less dynamic by €12 billion in 2015 compared to a change in inflation.
Thus, a possible decrease in interest charges will not be recycled into new expenses, but will contribute to the indebtedness: these expenses are indeed the result of excessive debt; this is the effect of the zero value standard.
In order to continue to contain the evolution of the total expenditure of the State in the event of a rise in the debt burden, the current conditions being particularly favourable, the Government will respect a change equal to inflation.
The stability in the value of government spending requires significant savings (estimated at €10 billion as early as 2013) compared to the tendential evolution of expenditure. This upward trend dynamic can have several origins, such as:
– a price effect with automatic price indexing mechanisms (e.g. for rents), benefits (accommodation allowances, certain social minima...), or the increase in the price of goods and benefits that the State purchases;
- a volume effect, with for example a structural increase in the number of beneficiaries of interventions served by the State (for adult disability allowance, exemptions from social contributions, university scholarships, housing allowances...);
– the multi-year impact of decisions already taken (e.g. investment).
B. ― A three-year budget for service
priorities of the Government
Introductory note: This Part is presented before taking into account the additional savings (€10 billion) under the Growth, Competitiveness and Employment Pact. Some of these additional savings may be related to the state. The sums of the expenses of the State described below are therefore a maximum.
The overall public finance programming covers five years (2013-2017). Within this period, the state is more accurately programming within the framework of a three-year budget that specifies the allocation for each mission.
This three-year budget is characterized by a differentiated spending mastery, in order to reduce the public deficit to 3% of GDP in 2013, then to structural balance in 2016. This will enable the implementation of the Government ' s priority commitments.
The ceilings of credits per mission, excluding State contributions to the Pensions Trust Account, which are arbitrated under the three-year budget, are as follows:
| External action of the State | 2.79 | 2.83 | 2.81 | 2.81 |
| General and territorial administration of the State | 2.22 | 1.97 | 2,19 | 1.95 |
| Agriculture, food, forest and rural affairs | 3.47 | 3.10 | 3.00 | 2.92 |
| Official development assistance | 3.30 | 3.10 | 3.07 | 3.07 |
| Veterans, memory and ties with the Nation | 3.12 | 3.04 | 2.95 | 2.83 |
| Council and State control | 0.48 | 0.49 | 0.50 | 0.50 |
| Culture | 2.54 | 2,44 | 2.38 | 2.35 |
| Defence | 30.35 | 30.11 | 30.15 | 30.15 |
| Government Action Directorate | 1,14 | 1,14 | 1,13 | 1,12 |
| Ecology, sustainable development and development | 8,00 | 7.63 | 7.29 | 7.09 |
| Economy | 1.59 | 1.56 | 1.53 | 1.52 |
| All Territories, Housing and City | 8.20 | 7.77 | 7.73 | 7.73 |
| State financial commitments (excluding debt) | 1,15 | 1,11 | 1.04 | 0.98 |
| School education | 45.40 | 45.69 | 46.10 | 46,58 |
| Financial and human resources management | 9.03 | 8.85 | 8.78 | 8.61 |
| Immigration, asylum and integration | 0.59 | 0.67 | 0.66 | 0.64 |
| Justice | 6.02 | 6.20 | 6.30 | 6.32 |
| Media, book and cultural industries | 1.41 | 1,22 | 1.09 | 0.97 |
| Outre-mer | 1.90 | 1.99 | 2.07 | 2,14 |
| Policy of the Territories | 0.34 | 0.32 | 0.31 | 0.30 |
| Provisions | 0.15 | 0.03 | 0.23 | 0.8 |
| Research and higher education | 25.12 | 25,62 | 25,74 | 25,86 |
| Social and pension schemes | 6.37 | 6.54 | 6.75 | 6,84 |
| Relations with local authorities | 2.56 | 2.74 | 2.60 | 2.59 |
| Health | 1.41 | 1,29 | 1,30 | 1,30 |
| Security | 11,58 | 11,68 | 11,78 | 11,96 |
| Civil security | 0.39 | 0.39 | 0.40 | 0.41 |
| Solidarity, integration and equality of opportunity | 12.53 | 13.18 | 13,48 | 13,74 |
| Sport, youth and associative life | 0.49 | 0.47 | 0.48 | 0.56 |
| Labour and employment | 9,95 | 10.13 | 9,68 | 9.74 |
| For memory: Public authorities | 1.00 | 0.99 | 0.99 | 0.99 |
(CP in M€)
| General budget expenditure | 290 714 | 87 | 4 | 290 805 | 291 180 | 293 895 | 298 368 |
| Collections | 74 457 | | 4 | 74 453 | 76 128 | 75 324 | 75 467 |
| Affected taxes capped | 3 013 | 2 234 | | 5 247 | 5 056 | 4 982 | 4 782 |
| EU SPP increase management compensation | | | | | 837 | | |
| Total State expenditure | 368 184 | 2 321 | 0 | 370 504 | 371 526 | 374 201 | 378 617 |
| Annual volume change in percentage | | | | | ― 1.45 | 1.01 | 0.56 |
| Debt charge | 48 773 | 0 | 0 | 48 773 | 46 895 | 48 368 | 50 864 |
| Contribution to CAS Pensions (state + operators) | 42 265 | 12 | 0 | 42 277 | 45 237 | 46 378 | 48 299 |
| Standard 0 value | 277 146 | | | 279 455 | 279 394 | 279 455 | 279 455 |
| Ecart to annuity 2012 | | | | | 60.7 | 0.0 | 0.0 |
1. Funding for Government priorities:
education, youth, employment, justice and security
The priorities of youth and education, employment and justice and security are given a special effort to ensure that these missions are able to improve the service rendered.
A major focus of government policy is on youth. As such, several measures are planned to:
youth employment:
Important measures will be implemented and funded to enable a stronger integration of young people into our society. The Government's commitment is reaffirmed through the implementation of future jobs. The goal is to provide more durable solutions than previous assisted contracts by targeting young people who are most in difficulty. As early as 2013, 100,000 future jobs will be deployed in areas where youth unemployment is the highest and, starting in 2014, the level of 150,000 future jobs will be reached and maintained over the period.
― youth autonomy:
Civic service is a privileged tool for commitment and self-reliance. It allows young people between 16 and 25 years of age to perform a mission of general interest in a public association or community. 30,000 of them will be able to integrate the system in 2013, which is 10,000 more than in 2012, and a budgetary effort of 26 million euros. The rise of the civic service will be amplified in the following years in order to reach the presidential commitment of 100,000 young people per year in the system over the five-year period.
― school education:
The President of the Republic made the school a priority of his mandate. In order to meet the challenge of the success of all students, 60,000 of the 65,000 new jobs created during the tenure will benefit from education, including 5,000 in higher education.
From the beginning of 2012, 1,000 additional teachers were recruited for primary school and 280 were redeployed to secondary school. The school's effort also focuses on school life with the recruitment of 100 additional primary education advisors, the creation of 500 prevention and security assistants in schools and 1,500 individual school assistants accompanying students with disabilities. These resources will be consolidated in 2013.
Between 2013 and 2015, all retired teachers will be replaced. In addition, according to the presidential commitment, 55,000 posts will be created in education over the quinquennium.
These creations will include the recruitment of trainees who will conduct teaching activities during their training in the teaching profession in the new higher schools of teaching and education. For the Ministry of National Education, this reform corresponds to the creation of over 11,000 jobs in 2013. In total, the impact of the job schedule on the job ceiling will be 9,011 full-time equivalents (FTEs), including 230 for agricultural technical education.
The new teachers will be better trained in the exercise of their profession. From the start of 2012, newly recruited teachers receive support training at the posting; As a result, more than 2,000 posts have been created to allow for the establishment of service landfills.
As part of the re-establishment of the school, higher schools of faculty and education will be established. In addition, future jobs Professor, at 6,000 new contracts per year on 2013-2015, will make teaching professions more accessible to young people for whom long-term education is being undertaken face economic constraints.
higher education:
The improvement in the success of undergraduate students continues to be the first emergency of higher education: in fact, the share of first-year university graduates in the second year is only 42%, and the success rate in three years is 34%, after losing five points in recent years. As a result, additional resources are planned for universities in 2013 with 1,000 job creations, within the 5,000 positions announced during the presidential campaign. These efforts will have to improve the conditions for the reception, assistance and supervision of students, to develop orientation and integration services, and above all to renew the pedagogical approach in some areas.
The second major focus of government policy is support for employment. Several measures are planned to:
― accompanying job seekers:
The Government's commitment is reaffirmed in favour of employment with the implementation of measures to improve the offer of service provided by Pôle emploi and enhanced support measures for job seekers. As a result, 2,000 additional ILC recruitments were initiated in late 2012 and will be finalized in 2013. In addition, 2,000 jobs will be redeployed by 2014 within the operator to the enhanced support services. It is therefore close to 4,000 additional agents, in direct contact with job seekers who need it most, that will ensure the success of the new service offering.
- assisted contracts:
100,000 future jobs will be created in 2013. As of 2014, the level of 150,000 future jobs will be achieved and maintained. In addition, in 2013, the budget provides for the continuation of the volume of other current assisted contracts to deal with a difficult employment situation (34,000 non-market contracts and 50,000 contracts will be prescribed in 2013).
– Generation contracts:
The generation contract will be a tool for simultaneously promoting, without opposing, the employment of young people and employment of seniors in companies, both quantitatively (youth hiring, increasing the employment rate of seniors) and qualitatively (favoring insertion in CDI, transferring skills...). Its implementation will be adapted to different sizes of business.
A bill will be introduced at the end of 2012, following the social dialogue launched by the Minister for Labour, Employment, Vocational Training and Social Dialogue.
The generation contract will be implemented in 2013.
A third priority of the Government is justice and security:
– Justice:
The funding allocated to the "Justice" mission (excluding Pensions) is up 3% compared to 2012.
In line with the presidential commitments to establish 5,000 posts in justice and security, the number of posts in justice will be strengthened over the period 2013-2015, including 480 in 2013 and 40 in administrative courts.
These means will enable the implementation of a renewed public policy of justice, strengthening civil justice, reaffirming the specificity of juvenile justice, developing measures of punishment and insertion to prevent recidivism, developing assistance to victims and access to law and modernizing services for the benefit of its actors and beneficiaries
The implementation of a rethought penitentiary real estate programme will support the development of prison facilities, in the service of the rehabilitation and security and humanity of detention.
A portion of the spending provided by the Prison Programming Act that focuses on the development of the number of places in prison will be abandoned, consistent with the Government's desire to develop "open" support. As a result of this abandonment, the limitation of the creation of new prisons to the responses to prison bladder and overcrowding will result in the reduction of new spending at the end of the programming, especially since the funding arrangements, in the form of public-private partnership, were particularly costly.
security:
In accordance with the commitment of the President of the Republic, the "Security" mission, which covers the allocations to the National Police and the National Gendarmerie, will receive job creations between 2013 and 2015, including 480 in 2013. These jobs will strengthen the security forces in the most sensitive areas of crime, particularly in the "priority security zones" defined by the Government.
2. Mobilizing all ministries to achieve savings to finance government priorities without increasing government spending
Funding for these priorities requires increased efforts in other sectors. Each ministry will take its part in the effort, as well as the State operators, while taking into account the capabilities of each.
The effort will go through a mastery of the payroll dynamics (section 7 of this Act).
In accordance with the commitment of the President of the Republic, the staff of the State and of all its operators will be stabilized on the quinquennium. This stabilization will be achieved at the end of the period, for the whole constituted by the State and its operators, whose employment ceiling is fixed in the financial laws of the year, in accordance with theArticle 64 of Act No. 2007-1822 of 24 December 2007 Finance for 2008. The list of these operators is detailed annually in the Yellow Operators, provided by theArticle 14 of Act No. 2006-888 of 19 July 2006 finalizing the 2005 budget.
2012-2013 staffing
| State | 4 278 | 2 317 | 1 961 |
| education | 4 278 | 8 981 | 13 259 |
| justice/security | | 1 000 | 1 000 |
| Other | | 12 298 | 12 298 |
| Operators | | 1 697 | 1 697 |
| Employment | | 2,000 | 2,000 |
| higher education | | 1 000 | 1 000 |
| Other operators | | 1 303 | 1 303 |
| State + operators | 4 278 | ― 620 | + 3 658 |
This stabilization will be the result of job creation in the priority sectors (education, justice, security, employment) and reductions in the other sectors: the average rate of effort over the period 2013-2015 will be 2% for the latter. These reductions will be allowed through structural reforms that are consistent with the maintenance and improvement of the quality of service rendered and implemented after a thorough analysis of missions and public policies.
These reforms will need to focus on a goal of public action coherence:
– gains will be made possible through the simplification of several procedures today too complex;
– the missions of the different levels of administration – central, regional, departmental and infra-departmental – will be reviewed with the objective of greater efficiency to meet the needs of users.
This stabilization of staff will help to control the payroll, which will change over the period of + 1% in value between 2012 and 2015.
Operating expenses will be controlled
across departments
These expenditures will be reduced in all departments, including government priorities departments. For example, the Department of Higher Education sees its operating credits decreasing by more than 6% in 2013 within a global envelope, excluding contributions to the Pensions CAS, increasing.
These efforts on operating expenses will include streamlining reforms, for example with regard to the territorial settlements of the State in France and abroad, while ensuring access to public service. The gains on the purchases obtained through the interdepartmental action of the State Procurement Service (SAS) will also be an effective lever. The new roadmap, transmitted to the Minister of Economy and Finance on July 24, 2012, will be declined by the end of the year by the various departments in specific procurement plans and with detailed savings targets. Overall, the ambition of procurement savings is doubled compared to the first plan deployed by the SAE in its creation (2009).
Participation of operators in the effort to correct accounts in justice (section 8 of this Act).
The report of the General Financial Inspection for State Agencies has highlighted the dynamics of the financial resources of these agencies: their public assets, which represent €50 billion (credits and taxes affected), have in fact increased by 15% since 2007 while State spending has increased less rapidly than inflation over the period. In addition, their numbers have grown by 6% since 2007 while the state's numbers were decreasing. Finally, the report highlights the lack of strategic reflection on the use of these agencies and a strong growth in structural costs.
The first steps taken by the Government in response to this finding are the reduction of the resources of these agencies so that they contribute to the recovery effort:
― the evolution of the state's endowments to the operators will therefore be very moderate (+0.7% off the dynamics of the CAS " Pensions" by 2015);
― the taxes will be capped and the ceiling will be lowered over the programming period (- 465 million euros by 2015, section 12 of this Act). They will be evaluated in June 2013 to monitor the relevance of each assignment;
– in order to achieve the stability of the state and its operators, the number of operators will be controlled with an average rate of effort (excluding universities and Employment Pole) of 0.7% on 2013-2017.
A more rigorous selection and evaluation of investments: Implement an ambitious policy aimed at the future needs of our society (Article 17 of this Act).
Public investment is a key factor in growth and competitiveness. Because it is also the guarantor of a quality public service offer, it must be chosen with special attention to reconcile development and control of public finances.
Investment choices made for ten years are insufficiently supported. The screening assessment procedures and the decision-making process do not always allow for the prioritization of projects and the promotion of those that will be most useful to the community. In addition, induced costs (remediation and operation investments) are generally undervalued.
The Government would therefore like to re-engineer the decision-making procedure for the investment of the State and public institutions and now submit projects of importance to a systematic socio-economic assessment and subject to counter-experts organized by the Commissioner-General for Investment (Commissioner-General for Investment).CGI).
The project is first and foremost responsible for the inventory and analysis of the evaluation procedures on existing but not yet implemented projects to ensure that these are the most relevant projects that will be selected and launched on a priority basis.
The selection process will also be continuously improved in an interdepartmental logic to ensure that the final commitment decision is as documented as possible. So, by the end of the year, CGI propose a procedure for interdepartmental consultation, preparatory to the Prime Minister's decisions at each major stage of the project's life, based on independent counter-experts that it will be responsible for organizing. This new organization will offer a homogeneous methodology for evaluation and counter expertise.
This effort will be informed by a process of reshaping and modernizing public action initiated by the departments themselves.
The process of re-engineering and modernizing public action will clarify the programming of public finances to inform the reforms and to assist in the recovery of public accounts in justice.
The priority is to conduct an in-depth review of public policies.
The terms and conditions of this exercise were specified by the Prime Minister at the Government Seminar on October 1, 2012. The approach is based on an objective assessment of the general revision of public policies (RGPP) and the recommendations of the joint mission entrusted to the general inspection of finances, general inspection of administration and general inspection of social affairs.
The project to restructure and modernize public action will be based on three pillars:
– improving the quality of service rendered, in order to always better meet the reality of the needs of users (citizens, companies, territories);
- the association of agents and their representatives to the definition and conduct of reforms;
– a hierarchy of government priorities and needs and a better division of skills to reduce duplication and inefficiencies.
In the summer, each department was asked to produce reform proposals that enable the implementation of the three-year budget guidelines while ensuring effective use of public resources.
To ensure the success of the modernization of public action, the association of all public policy actors is essential.
The method will be based on a census of public policies and of all the actors involved in it, in order to determine the tasks to be retained by the public authorities and the public actor to exercise them (central administration, disconcerted administration, operator, territorial community), while respecting the principles of the charter of deconcentration, lost of view. It will be closely articulated with the new stage of decentralization. As of December 2012, each department will have developed a multi-year modernization strategy (2013-2017) that will both meet the budgetary trajectory and improve the quality and efficiency of service rendered to users.
III. ― Mandatory Plan Expenditures
basic social security
Introductory note: This Part is presented before taking into account the additional savings (€10 billion) under the Growth, Competitiveness and Employment Pact. Some of these additional savings may be related to social security. Therefore, the expenditures of the basic compulsory social security schemes described below are a maximum.
The Government's objective is to preserve a high level of social protection, which is continuously adapted to the changing social needs.
Social security spending is transfers: it is unjustified to postpone funding for future generations. Ensuring the sustainability of our social protection system therefore requires the return to the balance of social accounts.
The general objectives of the evolution of mandatory levies do not allow to consider this adjustment only by a passive adjustment of revenues on the level of expenditures observed. It is important to ensure that social security financing does not absorb household purchasing power gains and does not weigh excessively on the cost of production factors.
As a result, the medium-term balance of social security accounts requires a sustainable change in spending.
In its section 10, this Financial Programming Act presents, within the scope of mandatory social security schemes, spending targets. In 2017, the objective of spending for mandatory basic plans was €531 billion, which corresponds to an average increase of 3.1% per year in value.
These spending targets include sickness, occupational injury/occupational illness, retirement and family. For the health sector, spending is essentially changing at the pace of the national goal of health insurance expenditures (ONDAM) whose evolution is detailed in the same article. The evolution of the expenses of the pension and family branches is for its part presented here in a tendential manner.
A. ― Mastering health insurance expenses
ensuring the quality of care
The national objectives of health insurance expenditures (NODAM) for the years 2012 to 2017 set out in this Public Finance Programming Act are defined by the perimeter in force during the construction of this objective in the 2012 Social Security Financing Bill, which is the subject of a detailed presentation in the year provided for in the year provided for in 7° of the III of Article LO 111-4 of the Social Security Code. In this way, in the NDAM the in-kind benefits of the branches Disease, Maternity and Industrial Accidents, the in-kind benefits of the branches Disease and Occupational Accidents with the exception of permanent disability benefits and work accident rents. For medico-social expenditures, only the portion of the funding that is echoing health insurance. Also included are the management of Liberal professional contributions and allocations to certain funds.
The evolution of the NDAM is programmed as follows:
― the target for 2012 (170.8 Md€) is less than €350 M in the NDAM voted in LFSS for 2012, resulting in more moderate changes in the social accounts than compared to the planned urban care expenditures;
― the growth of the NDAM will be + 2.7% for 2013 (175.4 Md€), + 2.6% for 2014 (180 Md€), then 2.5% for each year 2015 to 2017 (193.8 Md€ in 2017). In total, over the period, this programming represents an average effort estimated at €2.7 million per year compared to the trendy spending chronicle.
The setting up of an ONDAM up by + 2.7% in 2013 and + 2.6% in 2014 takes into account the Government's willingness to take the issue of hospital investment into account in a specific manner. A specific effort will be made within the 2013 and 2014 ONDAM to support priority projects for security and restructuring-rationalization.
Compliance with this path requires the implementation of proactive actions to improve the quality of care while respecting financial constraints, as part of a national health strategy. Some of these actions have structural changes in the provision of care, which will produce their full medium-term effects.
At the heart of this commitment, the improvement of care courses. City care, hospital, medical and social institutions can no longer work independently.
The structuring of community care teams, multi-professional, is the first step in implementing these courses. Multi-professional teams can produce new organizations and services (prevention, screening, route coordination, therapeutic education...) that meet the needs of patients. An important effort will be launched in 2013 to begin the generalization of these organizational modes, in order to allow the hospital to refocus on the most acute and complex cases.
More generally, the regulation of the system needs to be reviewed to identify health paths between city care, hospital care and the medical-social sector. A re-engineering of funding systems will be initiated from 2013 on a few territories in the first instance, in order to establish a new model that will allow the patient to deliver the quality gesture, in the right place, at the best cost. Then these new forms of regulation will gradually be extended to the entire territory.
These developments will be accompanied by the search for efficiency gains of care providers, especially for health institutions and health professionals who benefit from productivity gains related to technological developments.
In the hospital sector, efforts to streamline the procurement policy and support to improve the performance of institutions will also be carried out by mobilizing regional health agencies.
Finally, actions to lower prices of health products, but also to promote generic drugs, will be taken. They will be accompanied by actions aimed at a better accuracy of the prescriptions, preferring the drugs listed in the directory, as part of a more active promotion of the repositories of good practice and good use.
B. ∙ Adapting continuously and in consultation
benefits to social needs
If the expenses of the Malay branch are the subject of specific programming, the expenses of the Retraite and Family branches evolve, beyond their spontaneous tendencies, only by new measures, most often legislative.
The Government does not wish under this Programming Law to prejudge reforms that require prior consultation with social partners and important legislative work. As a result, the spending targets set by law are tendential.
With respect to pensions, the average increase in expenditures is +3.7% per year in value and, given the assumptions of price increases on which they are indexed, to +1.9% per year in volume. After a diagnostic phase, the Government, as agreed at the major social conference held on 9 and 10 July 2012, will engage with social partners in the first half of 2013 to include our distribution pension system in a sustainablely balanced financial framework.
Already, one of the key pillars of the Government's policy is to act in favour of the employment of workers between the ages of 55 and 64: the generation contract, which aims to enable the maintenance of seniors in employment while promoting the training of the youngest employees upon their arrival in the enterprises, will contribute to this effort. It is at the same time to inflect the evolution of the expenditure of the Older branch by encouraging companies to keep older workers in employment and to guarantee a level of funding to maintain a high level of pension in the future.
In the area of family policy, the major social conference concluded that it is important to better align devices with the needs of families. The reflections will continue with the actors of family policy on adaptations to the various aids for families, particularly within the framework of the High Council of the Family. The consultation will provide opportunities for improvement in terms of efficiency and equity, with a view to balancing the accounts of the Family branch. The measures taken will preserve the positive results achieved by our country regarding the birth and participation of women in economic activity and will protect the interests of the most fragile families.
Annex 1
Methodological precision
triennial budget
A. ― Expenditure management standards
1. Definition of double standard
changes in expenditure management
The field perimeter of the "0 value" standard covers:
– General budget expenditures, excluding debt charges and payments to the "Pensions" trust account (CAS).
Compared to the construction of the previous three-year period, a methodological difference has been made in the construction of this program: the transfer of the management of their payroll to universities has, among other things, the effect of raising the pension contributions of the employees who are assigned to the PSAP. This massive movement of contributions paid by state operators makes this recipe of the CAS sufficiently important to no longer be overlooked and to be treated in the same way as the contributions of the ministries to the CAS " Pensions", since it is a expenditure of the same nature, not controlled by the State. From this programming law, the perimeter of the "0 value" standard is therefore obtained by cutting off total expenditures (see infra) the debt charges, the contributions paid by the employer state on title 2 to the " Pensions" CAS and the payments made by the State's operators to this CAS;
― levies on income for the benefit of the European Union and territorial authorities, including levies established in compensation for the reform of the professional tax that had so far been excluded from the norm of expenditure (9);
― the stock of contributions and taxes allocated to third parties and subject to a cap limiting section 46 of the FAA 2012.
On the entire quinquennium, and therefore on the triennial budget period, the State's spending will meet the "0 value" standard.
In addition, on the entire quinquennium, all government spending (i.e., spending on the "0-value" field, supplemented by the debt burden and payments to the " Pensions" CAS) will not progress faster than inflation.
2. Stabilization of expenditure
The 2013-2015 budget, while funding the Government's priorities, is built on the basis of a stabilization in common euros of expenditure. This stabilization rule applies to the perimeter of the "0 value" standard, which includes as noted above:
― the total appropriations of the general budget of the State, excluding debt charges and pensions of government officials, i.e. excluding contributions to the CAS " Pensions", charged on the title 2 or paid by State operators on the basis of the subsidies paid on the title 3 or the resources allocated;
- the collection of revenue for the benefit of the local authorities and the European Union;
― the total amount of the assigned capped taxes referred to in section 46 of the original financial law for 2012.
This "0 value" standard excludes any recycling of less than expected expenditures on the debt burden or pensions for new expenses. Thus, total government spending will progress less quickly than inflation over the period 2013-2015 (–1% on average in volume).
3. Perimeter measures and budget charter
The principle of the constant field.
The reality of the expenditure dynamics is appreciated between two consecutive financial laws, at constant perimeter (or field). Indeed, the perimeter of State spending can be led to change from one year to another, with expenditures or revenues being newly recorded in the State budget, others on the other being out of the perimeter of the State budget. The budget must therefore be withdrawn from these perimeter changes to assess the real dynamics of the State's expenditure on an identical ("constant") field between two exercises. To this end, only expenditure movements and revenue assignments that increase or decrease the level of public expenditure are included in the calculation of the expenditure standard.
Conversely, movements that constitute a mere reimputation within the scope of the norm (e.g., between general budget and revenue collection) or balanced movements in income and expenditure, between this perimeter and another entity (e.g., local authorities), should not be recorded in this calculation. These movements, balanced in income and expenditure, are called transfer measures when taking place within the scope of the norm or perimeter measures when taking place between the same perimeter and another entity. Their consideration allows us to move from the constant field to the current field, on which the financial bill of the year is presented, but they are without influence on the appreciation of the budget dynamics.
The budgeting charter.
The following set of rules are the budgeting charter of the State, which allows, by specifying the modalities for taking into account field changes in the calculation of the standard, to determine the evolution of the expenditure at constant field level.
Transfer measures, because they relate to credit movements within the field covered by the standard, have no impact on the level of the norm.
Perimeter measures, which give rise to registrations or vice versa to deletions of credits that do not have to be integrated into the evolution of constant-field expenditures, cover situations in which the State:
― transferring to another entity an expenditure that it had previously made, by transferring resources in the same amount to finance it;
―inscribes to its budget a new expenditure previously financed by another actor, as well as revenues of the same amount;
― takes charge of an expenditure previously funded by capital holdings or by a deleted entity.
The decentralization movements illustrate the first case. The second corresponds to rebudgétisation measures, for example the concomitant and balanced reintegration within the general budget of a recipe allocated to an operator and the expenses it finances. The third case, finally, does not increase public spending or the public deficit, since the expenditure already existed and was financed by a recipe not taken into account in the public balance under the rules of national accounts.
In addition, this year the charter presents an evolution, linked to the integration in stock of certain taxes affected in the expenditure standard. As a result, since 2008, the affected taxes had been taken into account in the standard of expenditure only in respect of the forecast amount of their variance from discretionary measures. Only the flow of discretionary measures was thus traced back to the standard, while the stock of these taxes was not recorded, making it difficult to track over several years and did not allow for the dynamics of these taxes to be taken into account. Given the importance of the mobilization of all actors for the recovery of public accounts, a more comprehensive and systematic monitoring of the taxes affected, in a context of progressive captioning of the public accounts, has become necessary and justifies the modification of the detailed charter below.
The adjustment of the perimeter of the "0 value" standard includes taking into account all assigned taxes in stock, and only those. As the scope and level of the cap is required to evolve, this charter details the processing modalities of these movements in order to distinguish between the portion that constitutes a perimeter measure and the portion that has an impact on the expenditure standard.
Changes in the year's PLF tax cap may not cover three different situations:
– a change in the ceiling of an existing tax that has already been capped into a finance law.
The modification of the ceiling is assimilated to a variation in the resources allocated by the State to the entity. The ceiling modification in PLF is therefore reflected in the expenditure standard. If the ceiling is lowered, an economy is counted;
― adding an existing tax in the PLF cap article but which was not so far capped.
This is the case where, given the nature of the tax and the interest (see infra), the cap was deemed relevant. The cap measurement is then treated as a perimeter measure for the amount corresponding to the recipe assessment for the cap year. The new economy or expenditure, if any, related to the fixing of the ceiling to a level different from the assessment of the recipe is deducted from the expenditure standard. This is an evolution of the resources allocated to the entity;
– Creation of a recipe assignment in PLF.
Any new revenue assignment to an ODAC, unless it is an exception as defined infra, is fully taken into account in the expenditure standard, for an amount equal to the cap level. This measure is in fact equivalent to granting a grant to an organization.
In order to ensure proper monitoring of the State's expenditure, the objective is to limit all taxes to third parties other than social security administrations and territorial authorities, with the exception of the only taxes that meet a fee logic for service rendered, a polluter pays logic, or when the amount recovered by the organization is in relation to the cost incurred as a result of the fact generating the tax.
Each year, expenditure and revenue movements considered as perimeter measures and proposed extension of the cap field of affected taxes will be presented in the general statement of the reasons for the year's financial bill.
B. ― Nature and scope of authorities
of the multi-year budget
1. Credit ceilings and job patterns
in the multi-year budget
The multi-year budget determines two levels of payment credit ceilings to be met in the construction of the year's financial law, each year of the programming period.
(a) It first includes, for each of the five years of the programming, a total limit of payment credits for expenses subject to the "0 value" rule, in accordance with section 6 of this Act. This ceiling is independent of the inflation hypothesis and corresponds, at constant field level, to the credits fixed in the Financial Act for 2012.
This ceiling is part of a ceiling covering total expenditures (including debt charges and pensions). This overall ceiling does not increase faster, between two successive LFIs, than the forecasting evolution of prices associated with this Act (section 6) or that the forecasting evolution of prices associated with the year's financial bill, if it is different.
You can consult the table in the
JOn° 1 of 01/01/2013 text number 2
(b) The multi-year budget also includes the 2013 and 2015 ceilings for each of the general budget missions (see section 11 of this programming law). These are expressed as payment credits.
For the year 2013, the mission-level expenditure limits and the program-by-program distribution are consistent with those of the 2013 PLF.
For the year 2014, ceilings are fixed by mission and are not revisable.
For 2015, credits per mission will be subject to adjustments, in accordance with the overall spending limit.
2. The link between multi-year budgets
and annual financial laws
For each of the years of programming, the Finance Bill is drafted and presented to Parliament in accordance with the ceilings set out in the multi-year budget.
The first year of the programming is the framework of the 2013 Finance Bill, which provides a fine breakdown of credits by destination and by nature.
The second year of the programming will, in the same way, be the subject of a decline in the level prescribed by the Organic Law on Financial Laws (Programs and Shares, Titles and Categories) as part of the 2014 Finance Bill.
Finally, the third year of the programming (2015) will be the starting point for a new multi-year budget covering three years (in addition to the initial programming two years), i.e. 2015 to 2017. As noted above, adjustments in the distribution of appropriations per mission will be possible for the first year of the new programming (2015), while respecting the overall amount of expenditure provided in the initial multi-year budget.
The diagram below illustrates the different degrees of rigidity of the programming.
You can consult the table in the
JOn° 1 of 01/01/2013 text number 2
The diagram below illustrates the linkage of the various multi-year budgets.
You can consult the table in the
JOn° 1 of 01/01/2013 text number 2
Each year, the Government shall prepare and transmit to Parliament, no later than before the policy debate on public finances, an assessment of the adjustments made in relation to the ceilings set out in the multi-year budget, both with respect to the overall expenditure ceiling and ceilings per mission, in accordance with section 19 of this Act.
C. ― The operating rules of the three-year budget
The success of the three-year budget is based on rules that manage the uncertainties inherent in multiannuality. These rules must reconcile two requirements: ensure sufficient visibility to managers and ensure strict compliance with the expenditure standard, to ensure compliance with the public account recovery path.
This Part sets out the modalities for the operation of the multi-year budget.
1. An essential operating rule:
the implementation of the self-insurance mechanism
Corollary of the visibility given on the three-year envelopes allocated to each mission, the principle of accountability on multi-year ceilings per mission, or "self-insurance", is a budgetary governance rule, at the mission level, which must ensure respect for the three-year budget ceilings and thus the recovery path of public finances.
In budgetary construction (for future budgets beyond that of 2013) as in management, this principle implies that aleas or new priorities affecting the expenses of a mission are managed within the limits of the ceiling of its appropriations, either by redeployment of discretionary expenditures or by the realization of savings. These redeployments or savings must be implemented primarily within the program that supports new hazards or priorities. If not, they must be carried out between the programmes of the same mission.
The implementation of the principle of self-insurance thus allows for the limitation to be limited to exceptional situations only to adjustments that may affect in the course of the year the limits defined by mission or their revision in the context of the draft financial laws, as specified below.
In any case, in order to strengthen the self-insurance logic and to encourage compliance with the programming, the year-end overruns will not result in a downward revision of the available resources in the year n + 1, e.g. by the ban on the year n to year n + 1 or by the application of higher rates of reserve in year n + 1.
2. Provision
The 2013-2015 triennial budget does not provide for any budgeting reserve that would increase the overall mission ceiling. The budgeted credits on the "Reservations" mission are in fact intended primarily for accidental and unpredictable expenses, whose appropriations are distributed by decree, in accordance with Article 11 of the Financial Laws (OLF).
This is explained by the ambition of the 2013-2015 multi-year budget in terms of spending control, which translates into the "0 value" progression rule and does not allow for additional margins. Conversely, it must lead to giving the principle of "self-insurance" its full scope.
The precautionary reserve established in accordance with the rules laid down in Article 51, paragraph 4 bis, of the LOLF allows, for its part, to cope with important hazards occurring during management. It remains necessary to ensure the control of the expenditure in execution and will, as today, be constituted at the beginning of management by applying differentiated reserve rates on title 2 and other titles of the programs of the general budget.
In order to ensure the fair and equitable constitution of a sufficient reserve to deal with management hazards and to ensure respect for the recovery path of public accounts, this Act specifies, in its section 6, the minimum rates of limiting credits.
3. Compliance with the rules governing the evolution of State spending in the event of changes in inflation, debt and pensions assumptions
The programming set for the years 2013 to 2017 by section 6 of this Act is in accordance with two rules:
― the stabilization of the state expenditure of the "0 value" perimeter;
– an increase equal to inflation of total expenditures.
The programming is based on inflation, debt and pension assumptions presented in this report, which are likely to evolve by the time of the preparation of the 2013 financial bills.
However, regardless of these assumptions and their variation, the spending limits resulting from the application of the evolutionary standards set out in this Financial Programming Act will be met, with the most restrictive rule of both being retained for each year. Thus, in 2013, the strict application of the "0-value" standard is more restrictive than the evolutionary rule such as inflation in the total expenditure field: the credits covered by the latter will indeed decrease by volume by almost 1.4 per cent.
In the following years, if the cost estimates for the debt burden and pensions permit, the overall ceiling of credits will be revised downwards from that determined in the field of total expenditures, which will contribute to the state's debt.
Conversely, if the changes in inflation forecasts, debt and pensions no longer allowed to meet the overall limit of total expenditures, and even though the credits on the "non-debt and pension" perimeter would comply with the "0 value" rule, the ceilings of the missions' credits would be revised downward so as to limit inflation to the increase in total expenditures.
Annex 2
Major definitions
The concept of "public administrations" is defined in Article 2 of Protocol No. 12 on the procedure for excessive deficits annexed to European treaties; i.e. "Central administrations, regional or local authorities and social security funds, excluding commercial transactions, as defined in the European integrated economic accounts system (10)".
The equilibrium rule is considered to be respected if the annual structural balance (i.e. the fixed budgetary balance of the conjunctural and net changes of the point and temporary measures) corresponds to the medium-term objective (MTOM). Each Member State sets in its Stability Programme this MMT, which must meet a lower structural deficit limit of 0.5%, or 1% for States with a debt ratio significantly below the benchmark value of 60% of GDP and whose risks to the sustainability of public finances are low. It is submitted to the European Council in the context of the review of the stability programme.
In accordance with Article 2 bis of Council Regulation (EC) No. 1466/97 of 7 July 1997 on strengthening the monitoring of budgetary positions and the monitoring and coordination of economic policies, the medium-term objective (MTO) is set at a level of structural balance that guarantees "the sustainability of public finances or a rapid progression towards their sustainability, while authorizing a fiscal space, taking into account, in particular, the investment needs in public finances". The Code of Conduct for the Implementation of the Stability and Growth Pact states that the medium-term objective is differentiated by Member States to take into account the diversity of public economic and financial situations and the risks associated with sustainability (especially the level of debt and the evolution of future expenditures related to ageing).
In order to avoid the effects of the economic cycle, and to avoid the procyclical effects of a piloting by the nominal public balance (i.e. avoiding an expansionary fiscal policy when the situation is favourable and the tax revenues are dynamic, and inversely a restrictive policy at the bottom of the cycle), the contracting States put in place rules anchored on the structural balance, which corresponds to the adjusted public balance In particular, the effects of the cycle on tax and social plates are removed from the public balance (wage, household consumption and income, business earnings etc.) and the economic changes in unemployment benefits.
However, there are still elements in the structural balance that are not under the direct control of the Government and Parliament: for example, over-reactions of revenues to GDP change or changes in non-tax revenues, such as dividends received by public administrations.
The notion of structural effort corresponds to the share of the evolution of the structural balance resulting from discretionary measures. It includes a revenue effort and an expenditure effort.
The notion of "discretionary measures of revenue increase", which corresponds to the component of the structural effort of revenues, is defined as new tax and social measures decided and implemented by public administrations; They may be voted by Parliament or taken by regulation. The component of the structural effort that is carried by expenditures is an analysis of the evolution of public spending in relation to the potential growth of the economy: the effort is all the more important as the expenditure grows little in relation to potential growth.
Structural balance assessments and structural efforts require the estimation of a "potential growth" of the French economy: this is the growth that would be observed in the absence of tensions on the use of production capacities, and therefore corresponds to tendancial growth that is not subject to the fluctuations of the economic cycle. It is estimated from a projection of the tendancial gains of productivity and the potential supply of work, the latter dependent on demography, activity rates and structural unemployment.
Annex 3
Decomposition of variance
structural balance by subsector
Introductory note:
This annex presents changes in expenditures and revenues of public administrations without competitive measures.
Competitiveness measures impact the trajectory as follows:
| Public expenditure (*) | 4 | ― 10 | ― 10 | 11 |
| Mandatory removals (impact state alone) | 4 | ― 10 | ― 10 | 11 |
| (*) Savings in public spending will be disaggregated between subsectors of public administrations as part of the public policy modernization approach to which Parliament will be associated. | ||||
Structural balances by subsector
(Possible GDP points)
| UNCT | Actual balance | 4.5 | 3.9 | 2.7 | 2.1 | ― 1.6 | 1.2 | 1.1 |
| | Economic balance | 0.2 | 0.3 | 0.4 | 0.4 | 0.3 | 0.2 | 0.1 |
| | Ad hoc and temporary measures | 0.1 | 0.1 | 0.2 | 0.1 | 0.0 | 0.0 | 0.0 |
| | Structural balance | 4.4 | ― 3.5 | 2.1 | ― 1.6 | 1.3 | ― 1.0 | ― 1.0 |
| APUL | Actual balance | 0.0 | 0.1 | 0.1 | 0.1 | 0.0 | 0.1 | 0.1 |
| | Economic balance | 0.1 | 0.1 | 0.2 | 0.1 | 0.1 | 0.1 | 0.0 |
| | Ad hoc and temporary measures | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| | Structural balance | 0.0 | 0.0 | 0.1 | 0.1 | 0.1 | 0.2 | 0.1 |
| ASSO | Actual balance | 0.6 | 0.5 | 0.2 | 0.0 | 0.3 | 0.6 | 0.8 |
| | Economic balance | 0.2 | 0.4 | 0.6 | 0.5 | 0.4 | 0.2 | 0.1 |
| | Ad hoc and temporary measures | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| | Structural balance | 0.4 | 0.1 | 0.4 | 0.5 | 0.6 | 0.8 | 0.9 |
Distribution of structural effort
between public administration subsectors
The discretionary changes in government revenues and expenditures are used to determine consolidation efforts. A structural approach to the situation of public finances leads to the view that fixed expenditures on the effects of the economic situation that are progressing less rapidly than the potential GDP of the economy and the decisions of levy increases correspond to structural efforts (the weight of public spending in the potential GDP is reduced and that of revenues increases). Conversely, more dynamic spending than potential GDP and downsizing decisions are a structural disruption. The structural effort thus calculated corresponds to the "discretionary" component of the structural balance variation, the non-discretionary component of the fact that public revenues evolve spontaneously at a different rate of potential GDP (when income elasticity is not unitary).
In order to identify the share of the structural effort made by each subsector, a more detailed analysis is required, taking into account the elements that influence the balance of subsectors but not all public administrations: the costs of transfers between subsectors of public administrations and the changes in perimeters (basement of the State's RSA to departments or assignment of taxes initially to the State to a social security fund, for example). The simple agreement is to calculate the expenditure effort of a subsector by retaining only the constant perimeter of the expenditures it makes to economic agents that are not within the scope of public administrations, and to calculate its revenue effort by retaining only the rises/shorts of the subsector.
The various possible cases are summarized in the table below as well as the discrepancies with respect to the definition of a structural balance of subsectors of public administrations.
| Subsector expenditures to an economic agent outside of the APU (e.g. state operating expenses, family allowances for CNAF) | Contributes to the subsector effort as soon as the corrected expenditure on the effects of the cycle progresses less quickly than the potential GDP | Contributes to improving the structural balance of the subsector as soon as the corrected expenditure on the effects of the cycle progresses less quickly than the potential GDP |
| Subsector expenditures to another subsector of APUs (e.g. state revenue levies to local authorities) | Not counted in effort or effort of the subsector costs | Contributes to improving the structural balance of the subsector as soon as expenditure progresses less rapidly than potential GDP |
| Subsector recipes | | |
| New PO measures for a subsector (e.g. tax increases) | Contributes to Sub-Sector Effort | Contributes to the evolution of the structural balance of the subsector |
| Change in perimeter on subsector revenue (e.g. change in revenue allocation) | Not counted in effort or effort of the relevant subsectors | Contributes to the evolution of the structural balance of the subsector |
| Subsector revenues from another APU subsector (e.g., government revenue levies to local authorities) | Not counted in effort or effort of the relevant subsectors | Contributes to the evolution of the structural balance of the subsector based on its development in relation to potential GDP |
| Spontaneous evolution of revenues different from the evolution of GDP (e.g. strong changes in corporate tax) | Not counted in effort or effort of the relevant subsectors | Contributes to the improvement of the structural balance of the subsector as soon as the spontaneous elasticity of the recipes exceeds the historical average elasticity (reciprocally contributes to the reduction of the structural balance as soon as the elasticity is less than the historical average elasticity) |
Structural effect by subsector
(Possible GDP points)
| | Change in structural balance | 1.1 | 0.8 | 1.5 | 0.4 | 0.4 | 0.2 | 0.0 |
| | Structural effect | 0.9 | 0.9 | 1.1 | 0.2 | 0.2 | 0.1 | 0.0 |
| UNCT | Income efficiency | 0.5 | 0.7 | 1.0 | 0.0 | 0.0 | 0.1 | 0.3 |
| | Expenditure | 0.4 | 0.2 | 0.2 | 0.2 | 0.2 | 0.3 | 0.3 |
| | Other | 0.2 | 0.1 | 0.3 | 0.2 | 0.2 | 0.1 | 0.0 |
| | Change in structural balance | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | 0.1 |
| | Structural effect | 0.0 | 0.1 | 0.1 | 0.1 | 0.2 | 0.1 | 0.0 |
| APUL | Income efficiency | 0.1 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | 0.0 |
| | Expenditure | 0.0 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.0 |
| | Other | 0.1 | 0.1 | 0.0 | 0.1 | 0.1 | 0.1 | 0.1 |
| | Change in structural balance | 0.4 | 0.4 | 0.4 | 0.1 | 0.1 | 0.2 | 0.1 |
| | Structural effect | 0.2 | 0.4 | 0.7 | 0.1 | 0.1 | 0.1 | 0.1 |
| ASSO | Income efficiency | 0.4 | 0.4 | 0.6 | 0.1 | 0.0 | 0.0 | 0.0 |
| | Expenditure | 0.2 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 |
| | Other | 0.2 | 0.1 | 0.2 | 0.0 | 0.0 | 0.0 | 0.0 |
| Note de lecture: the "Other" line includes elements of structural adjustment not included in the structural effort. These elements are: the effect of the elasticity of mandatory levies, changes in the share of non-mandatory revenues in the potential GDP and neutral elements on the structural balance of all APUs but which influence the level of structural balances by subsector (variation of expenditures or revenues of transfers between public administrations and reallocation of revenues). | ||||||||
Annex 4
Table of correspondence between the provisions of the organic bill
and the present report annexed to the
| Programming assumptions | Part I. A: Macroeconomic scoping |
| Income, expenditure and balance of subsectors in national accounts | Part I. D: the trajectory of public finances: subsector analysis |
| Programming reforms and measures | Parts II for the State and III for ASSO |
| Any information that is relevant to the control of caps and spending objectives, including the principles for comparing the amounts that the FAA provides with the amounts in the FSAs and SSAs of the year. | Part I. D: the trajectory of the State and framed: key to the passage of the State |
| The unchanged political projection and the policies envisaged to achieve the OMT against these forecasts | Part I. C: the public finances trajectory: analysis of the overall recovery effort, first frame |
| Structural effort for each of the years decomposed by subsector with elements allowing the transition between effort and structural balance | Annex 3 |
| Potential growth assumptions | Part I. A: Macroeconomic scoping, table Key assumptions of the macroeconomic scenario 2013-2017 |
Done in Paris, December 31, 2012.
François Hollande
By the President of the Republic:
The Prime Minister,
Jean-Marc Ayrault
Minister of Economy and Finance,
Pierre Moscovici
Minister of Social Affairs
and Health,
Marisol Touraine
The Minister of the Interior,
Manuel Valls
Minister Delegate
to the Minister of Economy and Finance,
Budget Officer
Jérôme Cahuzac
