The Path of Public Finances from 2014 to 2017: The Helplessness of Law and Truth About Accounts

Abstract

The 2014-2019 Public Finance Planning Act has once again deferred correcting the public deficit, especially the structural deficit, to 2019 at best while France is still under an excessive deficit procedure provided for by EU treaties.

In part one, we review the gradual introduction of an increasingly cumbersome legal arsenal created by the European Union since the Stability and Growth Pact of 17 June 1997 and which is fully integrated into national law.

In part two, we present a new governmental path for public finance for 2014-2019, the Commission’s serious objections and our own assessment of deficit developments. Finally, in part three, we show the limitations of scrutiny currently provided by the fledgling High Council of Public Finance prior to the budget acts and subsequently by the Constitutional Council which has, for more than twenty years, shaped case law on the principle of sincerity concerning budget acts.

We conclude with the ineffectiveness of the onerous external and internal legal system in place to force France to reduce its deficits. We also expect the continuation of unchecked French public finances with a deficit of around 5% per year between 2015 and 2017 and a strongly negative structural balance of around 4%. At the end of the current five-year presidential term and the “Trente-Six Dispendieuses” (36 years of uninterrupted deficits from 1981 to 2017) far-reaching public expenditure reforms will be required. These will be all the more painful as they are far too late.

Keywords: Public finance, 2014-2017 path, Budgetary policy, Fiscal policy, Budgets, Structural balance

JEL Classification: E62