Public finances: France spends more than its European neighbors and pampers retirees

France’s public spending is very high, and this observation is not new. In a study published this Tuesday, March 19 on his information site on public finances, Fipeco, the former advisor to the Court of Auditors François Écalle compares the French situation to those of other European countries.

Result: France spends more than its neighbors in almost all areas. “The weight of public spending, as a percentage of GDP, is higher in France than in the European Union for all functions except transport, internal security and justice,” summarizes François Écalle. French public spending represented, in 2022, 58.3% of GDP compared to 49.5% in Germany or 43.5% in the Netherlands. The European average is 49.6%.

Retirement pension financing

At a time when the government is announcing budgetary restriction measures? 10 billion in savings on the 2024 budget, 20 billion to be found in that of 2025?, the economist reviews the main items of State expenditure. Public health spending represents 12.2% of GDP, compared to 10.5% on average in Europe. Those associated with unemployment amounted to 1.7% of GDP, compared to 1.2% on average. Debt interest, unsurprisingly, weighs on public finances in France with debt reaching more than 3,000 billion euros. They amounted to 2% of GDP in 2022, compared to 0.7% in Germany, queen of budgetary orthodoxy.

But the largest item of expenditure remains the financing of retirement pensions. “Pension spending reached 14.4% of GDP in France, compared to an average of 11.9% of GDP in the European Union and 11.9% in Germany. [?] This is the largest source of gap between public spending in France and the European Union average,” writes the economist in his report.

“This prioritization, compared to that of other countries, was made to the detriment of teaching, research, transport, internal security and support functions,” notes François Écalle. France thus devotes 0.3% of its GDP to fundamental research, compared to 0.6% on average in Europe and 1% in Germany.

The majority party favored by seniors

For François Écalle, if we want to reduce the deficit without increasing taxes, it is difficult in this context not to ask retirees to make an effort. “Retirement pensions represent a quarter of public spending,” he emphasizes. Retirees have until now been pampered fiscally by successive governments. Spared by the pension reform passed at the start of 2023 which only concerns future retirees, they saw their pensions increased in line with inflation (+ 5.3%) last fall. However, retirees have a higher standard of living, on average, than that of working people.

“Retirement pensions should be under-indexed to inflation: each time you revalue pensions by one point, it costs three billion,” insists the former magistrate of the Court of Auditors. Other spending items are more constrained, he explains: “It is difficult to make savings on health, education or military spending where an increase is more likely. »

But the executive does not want to hear about it. Politically, a decision in this direction would be more than risky, a few months before the European elections, while the majority party is a hit among seniors (34% voting intention for a list led by Valérie Hayer, supported by Renaissance, the MoDem and Horizons among those over 65, according to the Ifop survey for the JDD published at the beginning of March).

Other savings avenues can be considered even if they are “more difficult to implement”, believes François Écalle. Reduce the public wage bill, for example, not by affecting salaries but by affecting the workforce. “We should stop recruiting, particularly in local communities,” judges the economist. Another avenue which risks delighting the executive, while public officials are already demonstrating on Tuesday March 19 to demand salary increases.

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