The French Budget 2013: not very austere

I am going to use two news sources here, Liberation and L’Expansion to dissect the proposed 2013 French budget, which was released earlier today. France is significant because, along with Germany, it represented the pre-crisis axis around which the euro zone turned. France has moved to the left with its President Francois Hollande and that has shifted policy in the euro zone. Moreover, unlike Germany, at times France has found itself on the wrong side of euro zone bond vigilantes. Nevertheless, Hollande is supposedly going to cut and tax to meet deficit targets like the rest of the euro countries.

Liberation, a centre-left newspaper, touts this budget as the most important since 1945. In terms of actual spending, this budget is not really very austere. 12,298 staff cuts are proposed in the budget. Supposedly, the effort compensates for Hollande’s increasing staff and expenditure in the areas he cares about: education, defense, and law enforcement. The payroll will be essentially the same as in 2012 at 80.6 billion euros.

L’Expansion says the economic growth targets in the budget are unrealistic. The French government is betting on 0.8% growth next year, accelerating from growth already in the second half of 2012, two points which are dubious. And of course that will allow France to hit its targets. Accordingly, France is expected to eliminate the primary budget deficit entirely by 2017, with a 0.3% overall deficit, the lowest since the 1970s.  The table below from Liberation is in French but I think it’s understandable because the first row is the overall deficit while the second is the primary budget deficit.

I don’t have any more than that for now. But my first impression is that this is very optimistic on growth and targets and I don’t think France will be able to hit either.