In the 2022 draft budget bill, the French government foresees a deficit of 8.4% of GDP in 2021 and 4.8% of GDP in 2022 (vs. 9.1% in 2020). The public debt ratio is expected to increase to 115.6% of GDP in 2021 (from 115% in 2020), before declining slightly to 114% in 2022.

The large reduction in the deficit between 2021 and 2022 is primarily automatic. The improvement in the cyclical deficit is expected to contribute 1.6 points, while the 2.1-point reduction in the structural deficit is mainly due to the halting of most of the emergency support measures.

The disappearance of the emergency support measures in 2022 help generate a sharp decline in public spending as a share of GDP (-4.3 points), which explains not only the reduction in the fiscal deficit (-3.6 points) but also covers the reduction of the fiscal pressure (-0.8 points).

It is still too early for discretionary fiscal consolidation. The Covid-19 crisis still looms over the 2022 budget: both the French economy and society still need support. This support is provided via the roll out of the France Relance recovery plan, the pending France 2030 investment plan and increases in ordinary spending. Although the “whatever the cost” approach has been scaled back significantly compared to 2020 and 2021, it continues to prevail since no financing measures are proposed to offset the cost of the support measures.

According to the High Council of Public Finances (HCFP), the government’s 2021 and 2022 growth forecasts (6% and 4%) are “cautious” and “plausible”, respectively.

The HCFP has not commented on the plausibility of the French government’s fiscal deficit forecasts, since the draft budget bill was not completed. Certain spending measures were announced but had yet to be finalised (France 2030 investment plan, conditional income for youth), and were not incorporated in the 2022 draft budget bill. They will be integrated through amendments during the parliamentary debates.

Consequently, the Government’s fiscal deficit targets are likely to be adjusted in the weeks ahead. Its 2021 growth forecast has already been revised upwards to 6.25%. Yet we cannot be certain that the deficit will deteriorate further in 2022, since the current underestimation of spending could be offset by underestimated revenue.

Download The Full Eco Flash

BNP Paribas is regulated by the FSA for the conduct of its designated investment business in the UK and is a member of the London Stock Exchange. The information and opinions contained in this report have been obtained from public sources believed to be reliable, but no representation or warranty, express or implied, is made that such information is accurate or complete and it should not be relied upon as such. This report does not constitute a prospectus or other offering document or an offer or solicitation to buy any securities or other investment. Information and opinions contained in the report are published for the assistance of recipients, but are not to be relied upon as authoritative or taken in substitution for the exercise of judgement by any recipient, they are subject to change without notice and not intended to provide the sole basis of any evaluation of the instruments discussed herein. Any reference to past performance should not be taken as an indication of future performance. No BNP Paribas Group Company accepts any liability whatsoever for any direct or consequential loss arising from any use of material contained in this report. All estimates and opinions included in this report constitute our judgements as of the date of this report. BNP Paribas and their affiliates ("collectively "BNP Paribas") may make a market in, or may, as principal or agent, buy or sell securities of the issuers mentioned in this report or derivatives thereon. BNP Paribas may have a financial interest in the issuers mentioned in this report, including a long or short position in their securities, and or options, futures or other derivative instruments based thereon. BNP Paribas, including its officers and employees may serve or have served as an officer, director or in an advisory capacity for any issuer mentioned in this report. BNP Paribas may, from time to time, solicit, perform or have performed investment banking, underwriting or other services (including acting as adviser, manager, underwriter or lender) within the last 12 months for any issuer referred to in this report. BNP Paribas, may to the extent permitted by law, have acted upon or used the information contained herein, or the research or analysis on which it was based, before its publication. BNP Paribas may receive or intend to seek compensation for investment banking services in the next three months from an issuer mentioned in this report. Any issuer mentioned in this report may have been provided with sections of this report prior to its publication in order to verify its factual accuracy. This report was produced by a BNP Paribas Group Company. This report is for the use of intended recipients and may not be reproduced (in whole or in part) or delivered or transmitted to any other person without the prior written consent of BNP Paribas. By accepting this document you agree to be bound by the foregoing limitations. Analyst Certification Each analyst responsible for the preparation of this report certifies that (i) all views expressed in this report accurately reflect the analyst's personal views about any and all of the issuers and securities named in this report, and (ii) no part of the analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed herein. United States: This report is being distributed to US persons by BNP Paribas Securities Corp., or by a subsidiary or affiliate of BNP Paribas that is not registered as a US broker-dealer, to US major institutional investors only. BNP Paribas Securities Corp., a subsidiary of BNP Paribas, is a broker-dealer registered with the Securities and Exchange Commission and is a member of the National Association of Securities Dealers, Inc. BNP Paribas Securities Corp. accepts responsibility for the content of a report prepared by another non-US affiliate only when distributed to US persons by BNP Paribas Securities Corp. United Kingdom: This report has been approved for publication in the United Kingdom by BNP Paribas London Branch, a branch of BNP Paribas whose head office is in Paris, France. BNP Paribas London Branch is regulated by the Financial Services Authority ("FSA") for the conduct of its designated investment business in the United Kingdom and is a member of the London Stock Exchange. This report is prepared for professional investors and is not intended for Private Customers in the United Kingdom as defined in FSA rules and should not be passed on to any such persons. Japan: This report is being distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited, Tokyo Branch, or by a subsidiary or affiliate of BNP Paribas not registered as a financial instruments firm in Japan, to certain financial institutions permitted by regulation. BNP Paribas Securities (Japan) Limited, Tokyo Branch, a subsidiary of BNP Paribas, is a financial instruments firm registered according to the Financial Instruments and Exchange Law of Japan and a member of the Japan Securities Dealers Association. BNP Paribas Securities (Japan) Limited, Tokyo Branch accepts responsibility for the content of a report prepared by another non-Japan affiliate only when distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited, Tokyo Branch. Hong Kong: This report is being distributed in Hong Kong by BNP Paribas Hong Kong Branch, a branch of BNP Paribas whose head office is in Paris, France. BNP Paribas Hong Kong Branch is regulated as a Licensed Bank by the Hong Kong Monetary Authority and is deemed as a Registered Institution by the Securities and Futures Commission for the conduct of Advising on Securities [Regulated Activity Type 4] under the Securities and Futures Ordinance Transitional Arrangements. Singapore: This report is being distributed in Singapore by BNP Paribas Singapore Branch, a branch of BNP Paribas whose head office is in Paris, France. BNP Paribas Singapore is a licensed bank regulated by the Monetary Authority of Singapore is exempted from holding the required licenses to conduct regulated activities and provide financial advisory services under the Securities and Futures Act and the Financial Advisors Act. © BNP Paribas (2011). All rights reserved.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD recovers toward 1.1350 on modest dollar weakness

EUR/USD edged higher in the early American session and managed to erase its daily losses. Ahead of Fed Chair Powell's testimony, the pair is closing in on 1.1350. Earlier in the session, the data from the US showed that employment in the private sector rose by 534,000 in April, surpassing the market expectation of 525,000. 

EUR/USD News

GBP/USD extends sideways grind around 1.3300 ahead of Powell's testimony

GBP/USD continues to move sideways around the 1.3300 handle on Wednesday after the data from the US failed to trigger a significant market reaction. The ADP Employment Change arrived at +534K in November, compared to the market expectation of 525,000. FOMC Chairman Powell will testify at 1500 GMT.

GBP/USD News

Gold still depressed despite the better market mood

Gold recovered on Wednesday alongside the market’s mood, currently trading in the $1,780.00 region. The bright metal advanced on easing demand for the American currency, as stocks turned green following Tuesday’s setback. 

Gold News

Bitcoin to blast off to $100,000 following Plan B’s Stock-to-Flow model

Analysts are evaluating the probability of Bitcoin hitting fresh all-time highs before the end of 2021. There is a spike in fear among Bitcoin traders, but open interest in the futures market remains high despite sell-off. 

Read more

Cyber Monday 2021 Discounts!

Glued to your trading screen on Cyber Monday? Upgrade your skills by signing up for FXStreet’s Premium service, offered at a discount of up to 50%. Fellow traders have already taken advantage of Black Friday profits. What about you? 

Subscribe now!

Majors

Cryptocurrencies

Signatures