Exceeding 2,740 billion, greater than 118% of GDP, our debt will have doubled in a good twenty years. In eighteen months of the pandemic, France has joined the European top 5 of the most indebted countries (in terms of GDP / public debt ratio), behind Greece (205%), Italy (156%), Portugal (134 %) and Spain (120%), those southern European states that in Brussels and Berlin are ironically called “Club Med”. We have not finished with the health crisis and the drift in our public finances continues.
The covid to good two
Europeans are all facing the same shock, but not all Europeans have opted for a total budgetary commitment like ours. France, which has accumulated deficits for more than thirty years, is therefore seeing its debt explode, while fifteen States of the Union post a moderate ratio close to 70% of GDP. A gulf now separates us from these so-called “frugal” countries, less pusillanimous towards their fellow citizens and companies, and which especially have the particularity of having entered the crisis with a strong budgetary situation under control when we were, we, weighted down. a public expenditure revolving around 53% of the GDP. This is nearly points higher than the euro zone average.
Before the crisis, France spent roughly 100 billion more each year than its big neighbors. Approaching 800 billion, social protection expenditure, the basis of the French model, alone represents nearly a third of GDP, 32% to be precise against around 28% in the EU as a whole.
This is another European record in the form of a paradox: France, the itinerant philosopher writer Sylvain Tesson vividly sums up, is an Eldorado populated by people who believe they are in hell. Outside France, our “always more” is perceived as a national sport at the origin of fever attacks, strikes and other categorical demands. The crisis will have revealed in broad daylight the malaise of a bloated and disillusioned public service and forced the executive to increase staffing and salaries in the police, justice, health. In 2017, Emmanuel Macron promised to turn our model upside down, which he deemed unproductive and wasteful. Its reform of unemployment insurance could be adopted at the start of the school year. That of the APL will save 1 billion next year. But the five-year cat is skinny. And the promise to cut 120,000 civil servant positions has not been kept.
Will we have to reimburse our due by raising taxes?
Will it be necessary, in the hell of debt, that we repay our due at the cost of higher taxes, social sacrifices, an – explosive – drop in purchasing power? The government swears its great gods that it does not. As for covid debt, it is enough to wipe everything out with a stroke of the pen, suggest Mélenchon, Montebourg and a few rebellious spirits. In the name of what ? That this part of the burden is the product of an exceptional health accident and that it is already partly financed by the European Central Bank (ECB).
In the majority, in LR, in the PS, we are radically opposed to it. Before the regional ones, Marine Le Pen had rallied to the principle of political correctness, while the green Yannick Jadot, another candidate for the Elysee, got away with a pirouette: the debt, he explained, is not a problem since the interest rates are so low, it costs nothing to go into debt. What if they went back up? Right now, it’s true, we are borrowing in zero or even negative interest rate markets. The burden of the state debt, a criterion which primarily attracts the attention of the government, costs us around 35 billion. Compared to the GDP (about 2300 billion), it is little. Rigor and austerity being totally excluded at the end of the crisis, get into debt, do not be afraid to borrow, urge renowned experts, including Olivier Blanchard, the former chief economist of the IMF!
Move along, nothing to see ?
Others add, believing that the debt / GDP ratio that frightens us “amounts to relating a stock (the debt) to a flow (the GDP)”. However, observes Alexandre Mirlicourtois, in a logic of stock, the liabilities of the French debt are much lower than the assets. France remains a rich country. Its heritage is reassuring. And indebtedness does not come down to government debt, but to the sum of the debts of companies, households and public administrations to the outside world. Looking at the current account balance, we finally see that our (current) deficit had not exceeded the threshold of 1% of GDP until the outbreak of the damn virus. Move along, nothing to see ? Beware of red herrings.
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The global bill exceeds 420 billion
From 9.2% last year, our deficits will drop to 9.4% this year. A record since 1949. The cost of the virus and the recession is exorbitant. And the variants continuing to prowl, the closing of the crisis accounts is far from being completed while the global, economic, social and health bill of the covid exceeds 420 billion, the price of “whatever the cost” d ‘Emmanuel Macron. Our president can boast of being undoubtedly the most “generous” Western leader towards employees and companies. Will voters be grateful to him for preventing the collapse of the economy by generating a Himalayan debt?
On the political scene, untying the purse strings is a consensual practice on the right and on the left as at the extremes. Culturally, our leaders readily indulge in spending on credit, redistributing borrowed money on the markets without worrying about the resulting indebtedness. An exception: from 2005 to 2007, at the end of the Chirac era, the former minister Thierry Breton had practically brought debt and deficits into the nails of Maastricht. And France was then doing better than… Germany in terms of public accounting.