France: In order to make an assessment of fiscal policy, there is a need to know whether or not reforms will be effective

The French government is implement ing a number of tax cuts and public spending increases . Naturally, France’s fiscal deficit will therefore remain high in the coming years. Should it be corrected and should a restrictive fiscal policy with significant public spending cuts be conducted ? The problem is that the answer to this question depends on the effectiveness of the reform policies implemented: If they restore the employment rate and therefore potential GDP, it is this increase in activity that will reduce the fiscal deficit, and there is no reason to conduct a restrictive fiscal policy before the reforms have had time to produce effects; But if the reform policies are eventually ineffective, the lack of correction of the fiscal deficit will lead to a serious fiscal solvency problem and perhaps to a rise in risk premia on French government bonds . So to choose a fiscal policy for 2019-2020 in France, there is a need to know what will be the effectiveness of the reforms in 2021-2022.