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EUROPEAN FISCAL: French Budget Deficit Widens In Line With Seasonal Norms In Aug

EUROPEAN FISCAL
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The French YTD general government budget deficit widened in August, but this dynamic is in line with seasonal norms. The YTD deficit stood at E171.9bln in August (vs E156.9bln in July).

  • The YTD deficit was lower than the August 2023 outturn of E187.9bln. However, it has still grown at a much faster rate than in 2018/2019.
  • Relative to August last year, expenditure was E304.1bln (vs 306.1bln prior) and revenue was E205.2bln (vs193.4bln). The higher revenue was primarily due to a E7.5bln EU Recovery and Resilience Plan payment in July '24.
  • In Q1, the 4Q rolling sum of the general government budget deficit was 5.5% of GDP.
  • Although monthly tracking suggests that the budget deficit grew slightly less in Q2 than in Q1, this may be offset by lower nominal GDP growth of 0.4% Q/Q (vs 0.7% in Q1).
  • Yesterday, PM Barnier noted that the deficit was likely to exceed 6% in 2024, with the Government aiming to meet the EU’s 3% deficit target by 2029 (2-years later than initially planned).
  • A reminder that Fitch are scheduled to review France’s sovereign credit rating on Oct 11, before Moody’s (Oct 25) and S&P (Nov 29).

 

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The French YTD general government budget deficit widened in August, but this dynamic is in line with seasonal norms. The YTD deficit stood at E171.9bln in August (vs E156.9bln in July).

  • The YTD deficit was lower than the August 2023 outturn of E187.9bln. However, it has still grown at a much faster rate than in 2018/2019.
  • Relative to August last year, expenditure was E304.1bln (vs 306.1bln prior) and revenue was E205.2bln (vs193.4bln). The higher revenue was primarily due to a E7.5bln EU Recovery and Resilience Plan payment in July '24.
  • In Q1, the 4Q rolling sum of the general government budget deficit was 5.5% of GDP.
  • Although monthly tracking suggests that the budget deficit grew slightly less in Q2 than in Q1, this may be offset by lower nominal GDP growth of 0.4% Q/Q (vs 0.7% in Q1).
  • Yesterday, PM Barnier noted that the deficit was likely to exceed 6% in 2024, with the Government aiming to meet the EU’s 3% deficit target by 2029 (2-years later than initially planned).
  • A reminder that Fitch are scheduled to review France’s sovereign credit rating on Oct 11, before Moody’s (Oct 25) and S&P (Nov 29).