Page 24 - Economic report 2020

The public deficit reached 124,900 million The public deficit shrank after
euros in 2022, representing 4.7% of GDP, after the extraordinary increase due
hitting 9.0% of GDP in 2020. As for public
revenue, which represents 53.4% of GDP, this to the pandemic.
remained very dynamic (+7.3% in 2022 and
+8.4% in 2021), thanks to the recovery of the French economy after Covid-19, and rising prices,
which increase the bases (wages and business profits) of the main types of tax. As for public
expenditure, which represents 58.1% of GDP, this rose to a similar rate to the previous year (+4%)
mainly due to the increase in debt interest payments; increased remuneration of public employees,
and the measures passed to help the groups most affected by rising inflation. Regarding the debt
of the public administrations, according to the Maastricht definition, this fell slightly from 112.9%
of GDP in 2021 to 111.6% in 2022.

2. Prospects

One and a half years after the outbreak of war in Ukraine, and three and a half years after the first
lockdown, one could say that western economies, including France, have resisted these shocks
better than expected, but still run the risk of high inflation. However, not all countries are exposed
to such challenges to the same extent. Within the Eurozone, France is probably less jeopardised
than the countries that depended more on Russian gas before the war, so its economic prospects
for 2023 and 2024 are somewhat more positive than those of other countries like Germany or
the United Kingdom.

Early 2023 was characterised by a gradual In the first quarter of 2023, the French
22
easing of the supply chain problems and a economy has seen moderate growth.
reduction in energy prices, favouring a climate
of greater confidence among businesses and
households. Equally, French GDP grew moderately in the first quarter (0.1% quarter on quarter,
exactly the same as in the fourth quarter of 2022). Moreover, the inflation rate fell modestly
to 6.0% in May and the harmonised rate began to fall in the same month and reached 6.3%.
Household consumption, which benefited from this drop in inflation and milder-than-usual
weather in winter, remained stable, while investment fell slightly. In contrast, foreign trade made
a positive contribution to GDP growth, because imports declined in this quarter while exports
remained dynamic.
External environment of the Andorran economy | II. French economy

Chart 2.4
THE CONSUMER PRICE TREND IN FRANCE - Interannual variation rates, as %

General inflation Underlying inflation
Source: Eurostat.