3 %. This figure has been the subject of budget debate for years. A target that successive governments have sought to achieve: the public deficit, that is, the annual negative balance of the public administration budget, must not exceed this red line. This will not happen in 2025: the deficit is expected to reach 5.4% of gross domestic product (GDP). Likewise in 2026, which is expected to reach around 5%. The promise? Lower it below 3% by 2029.
But where does this 3% ceiling come from? Originally, it was… the French government! It’s a shame, because we always had a hard time respecting him. This recipe dates back to the 1980s: faced with incessant budget requests from his ministers, Republican President François Mitterrand then asked the Budget Department to find rules to limit spending surges.
In the Tribune in 2010, one of its designers, economist Guy Abeille, recalled: “In a hurry, in need of an idea, but aware of the assurance of seriousness that the GDP exhibition brought and the slight, but not too much, influence if rubbed with economics on everyone’s mind, we therefore concocted a basic deficit to GDP ratio, a very rounded object, a beautiful fantasy (in the first sense of the word), aware of the same action, well covered in the status given by our research, a little toy with our toolbox. But we don’t have a better one. This ratio still needs to be anchored. It’s just a matter of time. We look at the latest GDP estimates projected by INSEE for 1982. We include in our calculator the specter of a 100 billion deficit moving across our table in preparation.
3% for deficit, 60% for public debt
A rule that was later adopted with the aim of transition to the euro. The creation of a monetary union in reality required the establishment of budget rules to avoid “free riders”, i.e. a country that would take advantage of the lower interest rates offered by its more serious neighbors to go into more debt than necessary… while relying on the European Central Bank to bail it out in the event of a real panic. Doesn’t that remind you of something?
To find
Kangaroo today
Answer
Therefore, the Maastricht Treaty, later the Stability and Growth Pact, imposed limits of 3% on the deficit and 60% on the public debt – because, in the macroeconomic conditions of the time, a deficit of 3% made it possible to stabilize the debt at 60%. But 2.5 or 3.5% can be easily chosen… Because it is less a mathematical formula than a contract made with a neighbor. In fact, these regulations were never adhered to, and this did not prevent certain countries, such as France, from falling into greater debt than necessary.
In 2024, the Growth and Stability Pact, often criticized for being too rigid and dangerous for investment, has been reformed and now looks more like a negotiation process than a strict and uniform framework. However, the 3% deficit rule still applies. The last time we respected it was in 2019: at that time we were right at 3%. If this rule, in absolute terms, has no economic basis, then returns below 3% are important for France today, because our debt is on an explosive trajectory: it could exceed 130% of GDP in the next decade.
