Informations Rapides · 26 March 2021

In 2020, the public deficit reached 9.2% of GDP, the notified debt 115.7% of GDP General government national accounts - first results - year 2020

The general government deficit for 2020 stands at €211.5 billion, accounting for 9.2% of gross domestic product (GDP), after 3.1% in 2019. Revenues decreased by 63.1 billion (−5.0%). Their decline is slightly less pronounced than that of GDP in value terms (−6.1%). Thus, as a proportion of GDP they increased by 0.6 percentage points, from 52.3% in 2019 to 52.9% in 2020. The tax and social security contribution rate increased by 0.9 points to 44.7%. Expenditures increased by €73.6 billion, reaching 62.1% of GDP, after 55.4% in 2019. General government debt stands at 115.7% of GDP at the end of 2020.

In 2020, general government expenditure jumped to +5.5%, after +2.6% in 2019. Excluding tax credits, the increase is more marked: +7.1% in 2020 after +2.8% in 2019.

Operating expenditure increased by 2.3% in 2020 after +1.8% in 2019. Remuneration accelerated (+€6.7bn after €3.4bn in 2019) due to a net increase in remuneration paid to hospital staff (+€3.7bn). Intermediate consumption slowed down (+2.3% after +3.4%), due to a net decrease in purchases by municipalities, partly offset by exceptional spending by the State, Santé publique France and hospitals in the context of the health crisis.

The interest burden decreased again significantly (−14.4%) due to the maintenance of medium and long-term rates at historically low levels and the weakness of inflation, which had a positive effect on the interest cost of indexed securities.

Social benefits increased very strongly, by 8.0%, after +2.7% in 2019. Cash benefits accelerate sharply (+9.7% after +3.0% in 2019), under the effect of crisis measures, primarily the exceptional partial activity allowances (€27.4bn) paid by the State and Unédic. Social transfers in kind of market goods and services also accelerated, albeit more moderately, at +2.2% after +1.6% in 2019.

The exceptional measures decided in the context of the health crisis also resulted in very strong growth in other transfers and subsidies (12.2% after +4.2% in 2019). The growth in subsidies took place in the context of the extinction of expenditure on the tax credit for competitiveness and employment (−€18.5bn). It was driven primarily by the aid paid by the solidarity fund to companies and the self-employed whose activity was affected by the health crisis and the measures taken to limit the spread of the epidemic (€16.3bn), by the subsidies granted in the form of contribution exemptions targeted at the companies most affected by the crisis (€7.9bn), as well as by the others emergency aid measures put in place by public administrations.

Net acquisitions of non-financial assets decreased by 1.4% in 2020, after an increase of 11.0% in 2019. This decrease (−€1.3nb) is mainly due to the backlash (−€4.6bn) from the high level of investment by municipalities reached in 2019 at the end of the electoral cycle (down by €4.6bn in 2020), accentuated by the health context and the postponement of the elections. The drop in investment is partially offset by the significant change in Santé publique France's inventory (€1.7bn), mainly of masks.

In 2020, general government revenue fell by 5.0%, following an increase of 1.1% in 2019 in current euros.

Property income contracted sharply, by 25.1% (−€4.0bn), with the fall in dividends received. Sales and other operating revenues declined by 5.8% (−€5.5bn). Revenues from air traffic control and operations in particular were affected by the drop in air traffic (−€1.0bn). Local authorities' sales revenue also suffered significantly from the health crisis, due to the closure of public areas and the reductions in fares granted locally (−€2.9bn).

Taxes on products and production fell by 4.2%, recording a drop of €17.1bn. VAT revenue fell by €12.8 billion (−7.4%) due to the decline in household consumption and business investment, while the yield from the domestic tax on the consumption of energy products fell sharply by €4.4 billion (−14.0%) due to the travel restrictions imposed in the context of the health crisis.

Current taxes on income and wealth fell by €14.4bn. They decreased by 4.4%. The general social contribution fell by €2.7bn due to the drop in the wage bill and a lower rate applied to replacement income. Personal income tax fell by €2.0 billion – it would have increased without the measure to lower the tax scale, the effect of which is estimated at −5.0 Md€. Corporate income tax decreased by €3.7 billion. Finally, other current taxes fell by €3.7bn, mainly due to the third stage of the housing tax rebate for 80% of households.

The social security contributions collected fell again significantly (−4.1% after −4.6% in 2019, the year in which the CICE was transformed into a contribution reduction). Employers' contributions thus fell by 4.3% (after −6.8%). Household contributions fell by 3.8%. In national accounting, the regularisation of contributions by the self-employed suspended during the first wave of the epidemic, expected in 2021, in respect of 2020 is accounted for in 2020, as are the contributions due in respect of 2020 but deferred.

Taxes and social security contributions due in 2020 that may not be collected constitute a smaller revenue in national accounts. The estimate of this future non-recovery jumps in 2020 (+€7.8bn, including €7.5bn in taxes and social security contributions) because the debts recorded at the end of the year will grow very strongly with the deferrals granted to taxpayers, and some of these will not be recovered in the long term.

The historic deterioration in the general government borrowing requirement in 2020 is primarily due to the State (−€96.3 billion, of which −€71.3 billion excluding the assumption of the SNCF Réseau debt), whose tax revenues have fallen with the slowdown in activity, while expenditure on social benefits and subsidies has soared. The cost of the health crisis is also borne by the social security authorities, whose benefits increased strongly while the income from contributions fell sharply. The deficit of local authorities increased by €2.4bn, despite a drop in their expenditure, the fall in their revenue being more pronounced. The balance of local authorities deteriorated by €1.2bn and is balanced. The deficit of the various local government bodies deteriorated by €1.9bn to €4.2bn. Finally, the various central government bodies posted a very large surplus, reflecting the State's assumption of the SNCF Réseau debt, which from their point of view constitutes a capital transfer revenue.

General government debt (consolidated gross debt in nominal terms) increased by €270.6bn in 2020. At the end of 2020, the debt stands at €2,650.1bn, or 115.7% of GDP. This debt is accompanied by an increase in general government cash holdings (+€76.5bn), particularly those of the State and social security authorities, as well as an increase in loans granted by the State. As a result, the net public debt increased less strongly than the gross debt; it rose by €194.9 billion and reached 103.2% of GDP.

The increase in public debt in 2020 came mainly from the State (+€177.3bn) and the social security funds (+75.2bn€). These two sub-sectors were mainly indebted by issuing bonds (respectively +€179.1bn and +€76.3bn). The contributions to the net debt of the State and the social security funds increased less strongly than their contributions to the gross debt because of the increase in their cash holdings: the State's cash holdings increased by €68.1 billion in 2020; the social security funds' cash holdings increased by €17.8 billion (including €8.2 billion in the Treasury accounts).

Local public administrations also contributed to the increase in debt (+€19.5bn). This increase is due to the debt of the Société du Grand Paris (+€11.0bn), Île-de-France Mobilités (+€1.5bn), the municipalities (+€2.5bn) and the regions (+€2.9bn). The debt of the local administrations increased more than their financing needs and their cash on Treasury’s accounts thus increased significantly (+€15.3bn).

The contribution to the public debt of the various central government bodies fell by €1.4 billion.. This decrease is mainly the result of the debt reduction of SNCF Réseau (−€0.8bn) and the Caisse de la dette publique (−€0.4bn).