EUROPEAN FISCAL: French Budget Deficit Widens In-Line With Seasonal Norms
The French YTD general government budget deficit widened to E172.5bln in November. The November YTD deficit stands at 105.7% of the 2024 forecast deficit by the French Ministry of Finance (vs 114% in Jan-Nov of 2023's outturn).
- Note that November usually marks the low point of the year with the month of December usually seeing a surplus. The forecast for the whole year of 2024 is E163.2bln, and this print is a notably smaller deficit than the Jan-Nov 2023 period (E198.0bln).
- The balance of special accounts' deteriorated to -E22.5bln (vs -10.3bln in October 2024, and -E21.9bln in November 2023), leaving the current YTD balance more than 4 times where it is forecast to stand between Jan-Dec 2024 (at -E5.6bln), though this is in line with seasonal trends, with the account usually improving in December.
- YTD revenue rose to E312.0bln in November 2024 vs E297.1bln in Jan-Nov 2023, taking the YTD receipts to 90% of forecast (compared to 84% in Nov 2023).
- This is driven largely by a timing, rather than a fundamental issue. Non-tax revenues remain significantly above 2023 YTD levels recording E19.7bln in November and 83% of 2024 total forecast (vs E10.9bln in Jan-Nov 2023 and 44% of 2023 total). This is because of an EU RRF payment was received earlier in the year compared to 2023 (June rather than December).
- Tax revenues YTD are marginally above Jan-Nov 2023 receipts at E285.4bln (88% of 2024 forecast; vs E280.0bln in Nov 2023 and 87% of 2023 total).
- YTD total expenditure was E462.1bln (vs E473.2bln YTD in November 2023), this represents 91% of the 2024 total expenditure forecast forecast, broadly in line with where it stood in November last year (90% of total).
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Key notes from the release:
- "Inflows of new business showed the steepest fall since September as rates of decline quickened in both monitored sectors".
- "The downturn was particularly stark in manufacturing where new orders posted the sharpest drop in three months amid reports of client hesitancy, strong competition
for new work and lower demand from abroad". - "The decline in outstanding business was once again led by the goods-producing sector, which in turn saw another substantial round of staff retrenchment as manufacturers looked to scale back operating capacity"..."Services employment also fell, albeit only marginally".
- "Although expectations for output in the coming year ticked up further from September’s recent low, they remained weaker than the long-run average as firms voiced concerns about political uncertainty, a sluggish economy and troubles in the automotive sector".
- "Input costs rose at the fastest rate since April, reflecting the combination of a steeper rise in services operating expenses and a slower fall in manufacturing purchase prices".
- "Prices charged, posted the most marked increase since February, driven by a sharp and accelerated rate of service sector output price inflation".
