According to the INSEE preliminary estimate, the French fiscal deficit reached 3.4% of GDP in 2016, i.e. 0.1 point higher than the government’s target of 3.3% and 0.2 point lower than the 2015 figure. The fiscal deficit therefore continues to narrow progressively: since 2010, it has been reduced by nearly 4 points. This first set of fiscal metrics for 2016 goes along with a downward revision of the 2014 deficit (-3.9% instead of -4%) and an upward revision of the 2015 deficit (-3.6% vs. -3.5%). The extent of the improvement appears consequently less important between 2014 and 2015 and slightly larger between 2015 and 2016.
Since 2012, a key factor behind the fiscal deficit reduction has been the diminution of the debt service due to the fall in interest rates: this diminution explains half of the 1.4-point deficit reduction over the period. The downside is that this is not a durable source of savings. However, the other half of the deficit improvement is of structural nature, and therefore more lasting.
by Hélène BAUDCHON