Spending Efficiency and Reforms

Abstract

The trend increase in primary current spending over the last three decades leaves France with the highest spending ratio in Europe. France will need to reverse this trend through structural spending reforms to rebuild fiscal buffers that have been further eroded by the large fiscal response to successive shocks over 2020-22. This paper identifies areas where scope for savings or efficiency gains exist based on an analysis of public spending on key categories and related outcomes relative to peers. Reform of social protection, health, education, and civil service should preserve or improve outcomes while generating savings that would help meet medium-term adjustment needs. In parallel, rationalizing costly, distortive, or inefficient tax expenditures would allow for base broadening and partially offset permanent revenue losses from the rebalancing of revenues away from labor and production taxes.