Economic glossary.

Public debt

The total borrowing that general government still has to repay, measured on 31 December.

Gross consolidated debt of general government as defined by the Maastricht Treaty: central government, other central government bodies, local government and social security funds. Gross, because it does not subtract what these administrations own; consolidated, because the debts they owe one another are eliminated. The definition is European, which makes countries comparable.

Not to be confused — It is not the debt of central government alone, nor a net worth, nor an amount due within the year.

Source: INSEE — annual national accounts, European Regulation No 3605/93

Public deficit

What general government as a whole lacks to cover a year's spending with that same year's revenue.

Net borrowing of general government as defined by Maastricht, “Total” line. INSEE publishes it with a sign: net lending when positive, net borrowing when negative. The balance covers the aggregate — some sub-sectors can be in surplus in the same year.

Not to be confused — It is not the debt, nor the change in the debt: a year of deficit does not raise the debt by the same amount.

Source: INSEE — annual national accounts

Stock-flow adjustment

Everything that moves the amount of debt without going through the year's deficit.

The gap between the change in debt in a year and that same year's net borrowing. It includes in particular cash movements, loans granted, equity acquisitions and valuation effects. Breaking it down requires series other than debt and deficit.

Not to be confused — It is neither a measurement error nor hidden spending.

Source: INSEE — annual national accounts

European 3% threshold

The European reference value that sets the public deficit at 3% of gross domestic product, and debt at 60% of that same GDP.

Reference values of Protocol No 12 annexed to the Treaty on the Functioning of the European Union. They are expressed at market prices and, when exceeded, trigger the examination provided for by the excessive deficit procedure — not an automatic sanction.

Not to be confused — It is not 3% of the debt, nor a spending ceiling, nor a limit applying to an amount in euros. A deficit expressed in billions cannot be compared with this threshold without first being related to GDP.

Source: Treaty on the Functioning of the European Union, Protocol No 12 on the excessive deficit procedure

Gross domestic product (GDP)

The value of everything produced in France over a year.

The sum of the value added of all resident producers, plus taxes on products and minus subsidies on products. It measures annual production, and is therefore a flow.

Not to be confused — It is neither disposable income, nor accumulated wealth, nor government revenue.

Source: INSEE — annual national accounts

Nominal GDP

The year's production measured at that year's prices.

Also called GDP at current prices. It rises when the quantities produced rise, but also when prices rise. Over a long period, a large part of its increase comes from inflation.

Not to be confused — It is not GDP in volume terms, which removes the effect of prices and is used to measure growth.

Source: INSEE — annual national accounts

Value added

What a producer makes, minus what it had to buy from others to make it.

Output at basic prices less intermediate consumption — raw materials, energy, purchased services. It is the quantity the national accounts add up to form GDP, and the one from which the weight of an industry in the economy is derived.

Not to be confused — It is neither turnover, nor profit, nor employment. A firm that produces as much as before but subcontracts more sees its value added fall without having stopped producing anything.

Source: INSEE — annual national accounts

Industry (as defined by the national accounts)

Four groups taken together: manufacturing, mining and quarrying, energy, and water and waste.

Aggregate A10-BE of the national accounts classification. Public debate almost always refers to manufacturing alone — factories — which makes up the largest part of it but not all of it.

Not to be confused — It is not manufacturing alone. INSEE does not publish this aggregate on its own, and the energy it contains can move the total for price reasons unrelated to production.

Source: INSEE — annual national accounts, A10 classification

Compulsory levies

All taxes and social contributions actually paid to general government and to the European institutions.

Actual payments, without direct consideration, made to general government and to the institutions of the European Union. Imputed social contributions and those paid voluntarily are excluded.

Not to be confused — It is not public spending — which is broader, and also financed by borrowing. Nor is it the tax paid by a given household.

Source: INSEE — national accounts definition

Tax-to-GDP ratio (compulsory levies)

The amount of compulsory levies divided by GDP, expressed as a percentage.

It is a ratio: it moves when the amount levied changes, when GDP changes, or when both change at different rates. A fall in the ratio therefore does not imply a fall in what is levied.

Not to be confused — It is not a person's average tax rate: 43% of GDP does not mean that each French person pays 43% of their income. It is an average across the whole economy, which says nothing about distribution.

Source: INSEE — annual national accounts

ILO unemployment

Being without work, available to work, and having actively looked for a job over the past month.

The harmonised definition of the International Labour Organization, measured in France by the Labour Force Survey (enquête Emploi). It allows countries and periods to be compared.

Not to be confused — It is not the number of registered jobseekers: the two measures count neither the same people nor in the same way.

Source: INSEE — Labour Force Survey (enquête Emploi), International Labour Organization definition

Inflation

The general rise in consumer prices over a given period.

Measured by the change in the consumer price index, which tracks the price of a basket of goods and services representative of household consumption.

Not to be confused — Slowing inflation does not mean that prices are falling: it means they are rising less quickly.

Source: INSEE — consumer price index

Purchasing power

What incomes can actually buy, once prices are taken into account.

The ratio of households' gross disposable income to the price index of final consumption expenditure. INSEE also publishes it per consumption unit, which takes household size into account.

Not to be confused — It is not the wage: taxes, benefits and prices all enter the calculation.

Source: INSEE — household national accounts

10-year OAT

The rate at which the French State borrows over ten years on the markets.

The yield on ten-year obligations assimilables du Trésor (OAT, French government bonds). It varies continuously and is expressed as a percentage; its changes are expressed in basis points.

Not to be confused — It is not the average rate the State pays on its existing debt, which reflects past borrowing at different rates.

Stock

A quantity measured at a specific date, like the water level in a tank.

Not to be confused — It is not a quantity accumulated over a period — that is a flow.

Flow

A quantity measured over a period, like the rate at which a tap runs.

Not to be confused — A flow starts again from zero each period. It cannot be compared directly with a stock, and adding up flows does not necessarily reconstruct the change in a stock.

Percentage point

The difference between two values already expressed as percentages.

A rate that goes from 39.0% to 42.8% gains 3.8 percentage points. The same change is a relative increase of about 9.7%, since 42.8 divided by 39.0 equals 1.097. Both figures are correct and do not measure the same thing.

Not to be confused — This difference is never written “+3.8%”: that would be a relative increase, two and a half times smaller here.

Basis point

One hundredth of a percentage point.

One hundred basis points make one percentage point. A rate that goes from 3.50% to 3.75% gains 0.25 percentage point, i.e. 25 basis points. The unit is used for interest rates, where a tenth of a point is too coarse.

Index point

The unit in which an index is counted, such as a price or production index based at 100.

An index that goes from 7,000 to 7,070 gains 70 index points, i.e. 1%. The same 70 points from 3,500 would be worth 2%: the conversion depends on the starting level.

Not to be confused — An index point is not a percentage and cannot be converted without the level.

Current euros

Amounts expressed at the prices of the year in which they were measured, without adjusting for inflation.

Not to be confused — Two amounts in current euros several decades apart cannot be compared directly: part of the gap is simply the rise in prices.

Constant euros

Amounts brought back to the prices of a single reference year, to neutralise inflation.

Also called “in volume terms” or “in real euros”. The reference year must always be stated: an amount in constant euros means nothing without it.

Ratio

The result of dividing one quantity by another, such as debt relative to GDP.

A ratio moves for three reasons: its numerator changes, its denominator changes, or both change at different rates. Observing its change therefore does not say which of the two quantities moved.

Not to be confused — A ratio is not an amount, and its fall does not imply a fall in what is counted in the numerator.

Provisional

A figure published quickly, which the institute will revise in later rounds.

Not to be confused — Provisional does not mean doubtful: it is the best estimate available at its date, and the gap with the final value is generally small.

Source: INSEE — national accounts revision schedule

Semi-final

A figure already consolidated, but which can still move by one round.

Source: INSEE — national accounts revision schedule

Final

A settled figure, which the institute no longer revises except when the base changes.

Not to be confused — A change of base in the national accounts can revise final years: it is no longer a routine revision, it is a new measurement of the past.

Source: INSEE — national accounts revision schedule