The 2016 Budget: the challenge of keeping public spending under control

Whilst the trajectory of French public finances remains very close to that announced in previous years, the budgetary challenge is increasingly centred on the ability to reduce expenditure across the whole of the public sector. To date, cuts have mainly targeted the running costs of central government, with local authorities and the social security system also being asked to make efforts. In the absence of a stronger recovery in growth, the government’s strategy of containing the volume of expenditure will be difficult to sustain. Taxes rose sharply during the first few years of the five-year term, particularly for the wealthiest 10 per cent of households. Measures to simplify the socio-fiscal system / tax-and-transfer system, on the other hand, have remained very modest, and successive tax reforms centred on the lowest tax bracket appear to have been motivated primarily by a desire to show a reduction in the number of households liable for income tax. Finally, given the challenge of controlling public expenditure, better budgetary information on expenditure trends by policy area across the whole of public expenditure would be beneficial to the democratic debate.