Public Financing Laws for 2017, Fiscal and Budgetary Assessment of the Presidential 5-Year Term of Office

The respective trajectories of fiscal and budgetary policies during the presidential 5-year term of office now coming to an end have been very different: fiscal policy underwent a spectacular U-turn in 2013, whereas the continuity of budgetary policy was undeniable. There were two periods of different duration in fiscal policy: in 2012 it continued and accentuated the rise in tax and social security contributions sharply initiated in 2011; hitting not only companies but above all the income and assets of well-off households. However the 2014 Responsibility and Solidarity Pact symbolised the fiscal turning point of the presidential term of office, already begun in 2013 with the CICE (tax credit for competitiveness and employment) placing the emphasis on relentless reduction of tax and social security contributions for businesses, to which was added a movement to reduce income tax on limited and average income households during the last 3 years. The fiscal assessment for the presidential term of office is therefore positive overall for businesses but negative for households, while fiscal pressure on capital is now by far the highest in the OECD. As for French budgetary policy, it has made itself conspicuous through its absence of reduction in public spending, unlike most of the euro zone countries. Although the nominal deficit fell, from 5% in 2012 to nearly 3.3% in 2016, the causes for this are essentially cyclical, linked to exceptional savings especially in the government debt burden and a recent recovery of activity above the country's growth potential. On the other hand, the structural deficit, a key variable in European budgetary discipline, remained more or less stable and well above the objectives of the European Stability and Growth Pact, at a level close to 3% of GDP. As a consequence, the budgetary situation will be very difficult to manage during the course of the next presidential term of office, especially in the event of an economic downturn and a rise in interest rates