“You need to have a budget as quickly as possible. The longer you wait, the more impact there will be,” says political scientist Benjamin Morel

This text corresponds to part of the transcription of the interview above. Click on the video to watch it in full.

We have a big problem for French finances. There is a law on the table. We are talking about a special law which will be discussed in a few hours, particularly on the Matignon side. First, can you explain to us what a special law is?

Benjamin Morel: First, you have to understand that there is no shutdown. In other words, as in the United States, civil servants would not be paid, etc. It doesn’t exist in France. It is a principle of continuity of public service which means that not only can you, but you must pay civil servants, you must continue to operate public services. With or without special law, it should work and expenses are opened by decree. We will undoubtedly come back to this, but this is done on the basis of the previous year’s budget. On the other hand, if you can and if you must carry out the expenses, you cannot still take the revenues. Because there is a principle of consent to taxation and because, to borrow on the markets, you also need validation from Parliament. A special law, that’s it. A special law is what allows you to put revenues against expenses. You will have three items. Someone who says that the State can collect taxes is fortunate, because we cannot pay civil servants. On the other hand, part of these taxes is directed towards local authorities, so that municipalities, regions and departments continue to function. And another which allows the State to borrow on the markets because the balance is not favorable in terms of public accounts. This is one of our big topics. So today is just that. Obviously, this can have economic consequences, but on the other hand, it allows the State to be functional, as it was last year, from January 1 until mid-February.

For the daily lives of the French, for those who listen to us, what could this special law change for them on January 1st? Do we have some examples?

So, once again, there is a revenue side and an expenditure side. On the expenditure side, everything will depend on the interpretation we have within the framework of the decrees. But if we have a restrictive interpretation like last year, that means that there is a lot of current state spending which will obviously be carried out, but that there is exceptional spending. For example, recruiting civil servants, public investments that will not be made. If you do not have public investments or if you have minimal public investments and you are in a company which is a company which lives from public orders, this means that there will be no order.

If we understand what you are saying, no hiring even though there may be a need? Do we necessarily think about education?

So this is on the public service side, in fact. A priori, if we once again take a very restrictive view of last year, no new hires in major public services. On the other hand, if you are a company that makes its living from public orders, at that point, it becomes complicated because public orders do not take place, or at least, they do not take place right away. Again, after that is if we have a very locked version. Last year, that’s what we had. We could imagine making things a little more flexible. On the revenue side, we collect taxes, but on the basis of the previous year. And there, this is in particular the question of entry into income tax. As we do not re-index the income tax scales, if you were not taxable and you should not be because you have inflation indexation, you may be, the same if you had to change bracket. But be careful, all this if we don’t have a long-term budget. Because if we have a budget in a reasonable time, we will come back to what is reasonable, we can have a retroactive effect on the subject of taxes and even if we do not recruit civil servants or if we do not do public contracts in January, we will be able to do them in April, May, June.

We heard the Minister responsible for Public Accounts, Amélie de Montchalin, talk about this limit, she says by the end of January. Is there just the possibility of framing all of this in the coming weeks, perhaps?

So, there are two questions. Can we find a compromise before the end of January? That’s probably the case, but only if you go through something that’s taboo, that’s horrible, that’s infamous, that’s 49.3. So the problem is political. Do we need a special law before the end of January? The answer is no. Finally, do we need a budget before the end of January? The answer is no. The proof is, last year, we voted for it in mid-February. On the other hand, we must understand that for the reasons that we have given, that is to say because you risk having difficulties in making public investment, in recruiting civil servants, because on the other hand, you will have difficulties in collecting taxes on bases which are not too irritating for the French. The more time you spend with special laws, the greater the economic and political cost of your special laws is going to be. So, you need to have a budget as quickly as possible. The longer you wait, the more impact there will be. So the limit is not the end of January, but it would be better if it were quick. We must limit the damage. If it’s January-February, that’s good. If it’s April-May, that’s a problem. If it’s December, that’s a big deal.

Click on the video to watch the interview in full.