Economy

Rejection of the public finance programming law: what is the risk for France?



By rejecting its main articles, or by amending them to the point of emptying them of their substance, the opposition to the government, on the night of Tuesday October 11 to Wednesday October 12, unraveled the public finance programming law (LPFP) for 2023- 2027. To the point that his solemn vote, Tuesday, October 25, could end in failure for the government.

“It is not the text that excites the most, but it is extremely important because it gives the budgetary trajectory of our country over the next five years”, explains Renaissance deputy Jean-René Cazeneuve, general rapporteur for the budget, for whom the rejection of this text “could undermine the credibility of France”. “ It probably wouldn’t lower his rating with the rating agencies, but it wouldn’t be a good message.” he completes.

In fact, the absence of a LPFP poses several problems. On the constitutional level first: the current rules require that both the finance bill and the Social Security financing bill begin with an introductory article based on the programming law.

“An amputation of European funds”

“The Constitutional Council could judge that, in the absence of a preliminary article, the finance law does not comply with constitutional rules”, warns François Ecalle, honorary master advisor to the Court of Auditors and president of the Fipeco association. “But we can think that he will find a good reason not to go that far”, he hopes.

It is especially at the European level that the consequences could be unfortunate for France. Ahead of the parliamentary discussion, budget minister Gabriel Attal warned that failure to adopt the LPFP could cause “a delay, a delay, or even an amputation of the European funds paid to us as part of the recovery plan”.

The National Recovery and Resilience Plan (PNRR), the French version of the European recovery plan, provides for the passage of a certain number of “milestones” and the achievement of a certain number of “targets”, as as France receives European funds. This was a requirement of the “frugal” countries, the Netherlands in the lead, vis-à-vis the members deemed to be spendthrifts, before the European Union ran into debt.

“The parliamentary debate is not over yet”

Among the “milestones” that France must cross by the end of the year is expressly the“entry into force of a new public finance programming law (…) fixing a trajectory of public finances making it possible to stabilize and then decrease the debt ratio”.

His absence could therefore call into question the next payment that France must request before the end of the year.

“As for any Member State, the Commission monitors the implementation of the recovery and resilience plans and will only assess the satisfactory achievement of the milestones when the Member State concerned has submitted the corresponding payment request”, delays Veerle Nuyts, spokesperson for the European Commission on economic and financial affairs, for whom “the parliamentary debate is not over yet”.

“The Commission will cough”

The LPFP must actually go through the Senate, before returning to the National Assembly. But the debates of the night of October 11 to 12 showed that it will be difficult to pass the text without using 49.3. However, the government would not wish to grill on this text its only possibility of the session to use this procedure. “Given our relative majority, it would then be very long until June”, recognizes Jean-René Cazeneuve.

“As long as France has not submitted its request for payment, we will not check whether the milestones have been reached”we insist at the European Commission, where we recall that this verification is “a new tool” still running: “There is discretion and analysis, but it’s not all set in stone. “I don’t think there are plans to take money away from France for five minutes,” points out another source.

As François Ecalle acknowledges, “the Commission will cough, but as it is about France, it will pay anyway”.



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