The objective for 2007 is to descend to 2

The moment of truth has sounded for Thierry Breton. The Minister of economy and finance will present on Wednesday its second draft budget since it is installed in Bercy. And as collaborators, it is more, as in previous years, of "making the quilt in the suitcase" but rather "to land the 747 on a postage stamp." Thierry Breton is further expected that he will have spent his time, this year, to advocate the remediation of public finances, promising after the publication of the Pébereau report, a decrease of 2 points of debt as of 2006. Experts doubt that it is reached, as long as the deficit of the State will remain higher than 35 billion.

Nevertheless, a surprise is reserved for the French. According to our information, Thierry Breton announce them that the 2007 deficit will be less than 42 billion, or even close to 41 billion euros, instead of the 43 billion raised so far. The Minister delegate for Budget, Jean-François Copé, it was also suggested as early as Friday: "We hope to do better, we work". Compared to 46.9 billion euros registered in original Finance Act for 2006, the improvement is naturally encouraging. It has two explanations. The first comes from the economic recovery and good receipts taxes, giving oxygen to the Government. Capital gains tax could exceed 5 billion euros this year. The corporate tax is particularly dynamic ("Les Echos" of 13 July) and the income tax, with pre-filled Declaration opened in the spring, would return 1 billion more than expected in the boxes. In execution, the 2006 budget could to be completed on a EUR 42 billion deficit and thus to give the advance to the Government plan.

Do not release the effort

The second explanation is political. Before the presidential, Dominique de Villepin cannot apply only to a reduction in the deficit from 2006. Similarly, if he was able to reduce the public deficit State, local communities and combined social security just below the 3 of the GDP last year, he hopes to display 2.6 this year. And therefore no question of releasing the effort, while Brussels should propose in early November to terminate the procedure for excessive deficit against Paris three years ago. However the closure of the financing of social security is so tight (read below) to be at any price tighten screw on the finances of the State to avoid any degradation. The objective for 2007 is to descend to 2.5.

Tax reform already enacted

Beyond these large clusters, there is nothing important to budget 2007 that we know already, since the tax reform had already enacted last year and that all new measures have been announced since re-entry. They are translated into more than 12 billion euros of additional charges, despite the unprecedented removal of 15,000 positions of public servants. To the end, the Government will have sought new recipes. The State will receive EUR 800 million by virtue of the change in tax treatment of equity, but it failed to get their hands on all of the gain recorded by the Caisse des Dépôts in the surrender of the squirrel (see page 29).