French Court identifies up to €38 billion in potential public savings

The Court of Accounts’ contribution to restoring public finances estimates a potential €32 to €38 billion in savings and additional revenue. This figure is derived from a selection of previous recommendations from the Court and the Council for Mandatory Levies, which could have an effect as early as next year. Implementing these measures remains a decision for the government and parliament.

Some of these proposals overlap with provisions already presented in draft finance and social security bills for 2027. This overlap, valued at €11 to €14 billion, prevents the entire announced amount from being added to the government’s overall effort. The report presents several possible combinations, with varying returns depending on the parameters chosen.

Savings are calculated relative to the situation that would prevail without new measures. One example cited is freezing the revaluation of certain pensions and benefits, including minimum social assistance payments. This would allow for lower spending while maintaining the nominal amount, but would reduce the purchasing power of beneficiaries due to inflation. The court estimates this option would yield €4.8 billion in 2027, after accounting for associated losses in tax and social security revenue.

The report also considers changes to Value Added Tax (VAT) and tax benefits as potential revenue sources. Raising the intermediate VAT rate from 10% to 13% could generate €4.3 billion. Alternatively, applying a 20% VAT rate to currently 10%-taxed restaurant and personal services (excluding childcare and autonomy services) could yield €4.6 billion. These scenarios are presented as alternatives, meaning their benefits do not add up.

Regarding business transfers, the Court reiterates its request to revise the Dutreil pact, which would reduce the allowance from 75% to 50%, potentially generating €1.3 billion. The tax credit for certain home services would decrease from 50% to 40%, while preserving childcare and assistance for the elderly or disabled, generating an expected return of €1.1 billion. These measures would increase the tax due or reduce tax refunds for beneficiaries.

A separate note published on the same day details 474 tax expenditure programs in 2025. Their cost has risen from €54.6 billion in 2005 to €105.6 billion in 2025, at constant scope and in current euros. The Court calls for a better evaluation of these aids, noting that 13% of programs remain unquantifiable by the administration, and no comprehensive review of their effectiveness has been conducted in over fifteen years.

Revenue estimates do not systematically deduct the economic consequences of reforms. For VAT, the Court notes that price and demand reactions could reduce the actual gain on the deficit. The revenue from the Dutreil pact reform is also calculated without integrating changes in taxpayer behavior.

Budget forecasts remain fragile. In an opinion released November 4, the High Council of Public Finances now considers the 0.5% growth rate projected for 2026 to be difficult to achieve, suggesting 0.3% is more likely. It estimates that simply incorporating the foreseeable increase in interest on inflation-indexed bonds would raise the projected deficit for that year from 5.4% to 5.5% of GDP.