ways to reduce public spending

"What are the savings that you think are priorities to do? Should we remove some public services that are outdated or too expensive compared to their utility? " It will not take long for France Stratégie to answer the questions asked Sunday by Emmanuel Macron in his letter to the French setting up the great national debate.

Hazard of the calendar, this think-tank attached to Matignon has indeed published this Thursday a note with explicit title (

"Where to reduce the weight of public spending? ").
The answer provided is not without requiring some painful choices.

Pensions, business support, health: ways to reduce public spending

Efforts on pensions and health

"It is possible to reduce public spending by 3 percentage points of GDP in 5 years while preserving or even increasing the credits allocated to Defense, Education and Investment; but moderate efforts are probably needed to curb social spending » next to more significant savings on operating costs and business support, says Fabrice Lenglart, Deputy Commissioner General of France Strategy. Clearly, savings on pensions, health or social assistance are essential to achieve such an objective, prior to a decrease in the tax burden and a reduction in debt.

To trace these tracks, the research institute tried hard to draw the most complete picture possible of the situation of France in this matter. Two salient points emerge. First, the increase in public spending has been continuous for 20 years (+4 points of GDP, for a total level representing more than 56.5% of the national wealth in 2017), the few inflections only being due at the conjuncture.

Effective redistribution

Above all, France stands out clearly from its neighbors, with an expenditure level 8 points higher than the average of 11 Western European countries. How to explain such a gap? First because of the weight of pensions in France (+3.4 points compared to our neighbors). "Half of this difference comes from the fact that other countries have not opted for a system that is almost fully socialized like us, the other half is due to the generosity of our pension plans", says Fabrice Lenglart.

Side "crazy money", France spends more on welfare (+ 1 point of GDP). But this remains less than in Northern Europe, and above all, this redistribution is relatively effective since the level of poverty is low compared to most of our neighbors. Still in the social sphere, the difference in health expenditure is also sharp (+1 GDP point), which translates into the lowest household dependent burden in Europe.

Less education expenditure

But it is not only in social matters that public power is generous. France spends more than its neighbors for the regalien (+0.7 point, an understandable gap considering the weight of the Defense), public investments (+0.6 point) and especially aid to the economy (nothing less than 1.9 percentage points of GDP). There are also higher operating costs than elsewhere, but the difference remains moderate (+0.5 GDP points).

Finally, France stands out in terms of education and research, but this time down (-0.7 points of GDP). The difference is even stronger with the Nordic countries (-2.7 points), especially for early childhood and higher education. Not enough to prepare the economy of innovation advocated by Emmanuel Macron.

Pensions, business support, health: ways to reduce public spending

Crest path

Faced with this situation, how can public spending be reduced by 3 percentage points of GDP, as promised by the government? France Strategy advocates a crest road. "If we wanted to exonerate the regalien or the social sphere from any effort, this would lead to an unreasonable drain on the other sectors", notes Fabrice Lenglart.

The think tank seems to lean towards a more balanced cocktail, which would also increase spending on education, defense and investment (considered essential for the ecological transition). It will require a significant drop in support credits to the economy or general operating expenses (note notes the "Drift into local communities" between 2000 and 2014). But also savings on pensions, health or personal assistance. "These are moderate efforts that seem possible. The quasi-freeze measure of pensions in 2019 and 2020 as desired by the executive thus makes it possible to achieve three quarters of the savings we are making ", details Fabrice Lenglart. It is also necessary that the executive gets its way, since the Constitutional Council requires it to return to the charge for 2020, which is not obvious given the social context.

Renaud Honoré