2022: 60 billion more expenses

Budget and taxes

2022: 60 billion more expenses

Budget and taxes

compared to the initial finance law

08 July 2022 •
Samuel-Frederic Serviere

Thanks to the documents published at the beginning of July, we finally have indicators that allow us to update the main aggregates of our national public finances for 2022. The financial equation is becoming more and more complicated… public deficit -132.6 billion euros, public debt 2.936 million euros, public spending 1,518 million euros, mandatory levies 1,175 million euros, and a State debt burden that skyrockets from 36,400 million euros to 53,800 million euros.

Source: PLR 2021, PLFR 1 2022 and iFRAP Foundation calculations as of July 2022.

  1. 2.5% growth in 2022: The Government has published an assumption of real growth of 2.5%, but to which is associated a GDP deflator of 2.3%. This would result in a nominal growth of 4.9%. As inflation is mainly “imported”, the result is a fall in the deflator relative to the HICP (2.3% vs. 5% and 3.9% excluding energy and food).
  2. Public revenues increase 0.3 pt of GDP to 52.9% of GDP in 2022 : The PLFR would increase public revenue by €57.2 billion compared to the 2022 LFI, which represents an increase of €72.4 billion compared to the 2021 execution.
  3. Mandatory levies increase 0.5 pt of GDP to 44.8% of GDP in 2022 : Strong momentum driven by inflation, with an additional return of €67.2bn compared to 2021 and €50bn compared to LFI 2022.
  4. Public spending falls -1.1 points to 57.9% of GDP in 2022 : but an increase in value of almost 42.9 billion euros compared to 2021 including tax credits (including CICE in the process of elimination) and +44.3 billion euros without tax credits. It should be noted that public spending without tax credits would increase compared to the 2022 LFI by +59.8 billion euros.
  5. The public balance would remain stable at -5% of GDP between the LFI and the LFR 1 2022: In fact, €59.8 billion of additional spending would be offset by €57.2 billion of additional revenue, including €7.2 billion of higher non-tax revenue. The Balance would therefore be blocked at 5% of GDP, that is -132,600 million euros, but in deterioration compared to the LFI of 2,600 million euros. The good news of additional income linked in the short term to inflation would be fully offset by continued growth of the same level of public spending…leaving the balance unchanged with respect to the LFI.
  6. Public debt in 2022 should improve compared to 2021, by 0.6 pt to 111.9% of GDP : this improvement would be due to movements in the opposite direction: a GDP growth effect of -1.8 pt less than offset by a total effect of increased inflation (consumer prices, GDP prices and wage prices) of +1 .2pt
  7. A charge of the State budget debt that shoots up to 53,800 million euros : in fact, the weight of the “budgetary” debt was evaluated in LFI 2022 at 36.4 billion euros, that is, a budgetary cost of +17.8 billion euros. The effect of inflation on the OATi should cost about 15,900 million euros, to which must be added the effect of the rise in interest rates, that is, 1,500 million euros and other effects increase (0,400 million euros ). Compared to 2021 (state debt burden of €36.6 billion, growth is +17.6 billion).

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