2023-04-20 09:44:17
Now that the postponement to 64 years of the legal retirement age has been promulgated, will France finally “get out of debt”? In any case, this is the political signal that Bruno Le Maire and Gabriel Attal were to send, Thursday, April 20, by presenting the stability program. This exercise intended for the European Commission, in which France details each spring its budgetary trajectory for the rest of the mandate, takes on particular importance this year: it comes after a reform placed, from the start, under the sign of financial balance of the system.
During a press conference on Thursday, the Minister of the Economy was to boast of his “Accelerated debt reduction target for France”. “It’s the end of the era of free money: we must regain control of our debt to remain free [de] our choices “was to hammer Gabriel Attal, his counterpart delegated to public accounts.
In fact, in this document, which must be presented to the Council of Ministers on April 26, the government displays a surprisingly proactive objective: the public debt, which had already fallen to 111.6% of gross domestic product (GDP) at the end of 2022, will only have to represent 108.3% in 2027. In the previous versions of the trajectory, the debt as a percentage of GDP only began to decline from 2026, in accordance with Emmanuel Macron’s campaign promise.
Optimistic executive
Same acceleration displayed on the side of the reduction of the public deficit: it would drop from 4.7% of GDP last year to 2.7% at the end of the five-year term, less than the 2.9% hitherto targeted by the government – despite jumping to 4.9% this year. “We have just asked our compatriots to make an effort with the pension reform, (…) it is right that the public actors – State, local authorities, Social Security – are also involved”justified the Mayor.
These ambitions may come as a surprise, as interest rates rise and Emmanuel Macron has multiplied costly promises lately: military programming law (413 billion euros by 2030), revaluation of student grants and salaries teachers, promise of additional resources with 700 new posts at the Quai d’Orsay…
Where, then, could this debt control come from? Inflation, in particular – although the government does not put it that way. If it affects the purchasing power of households and the margins of companies, the rise in prices – in the short term – is good for public finances: it mechanically reduces the debt as a share of national wealth, while allowing an inflation tax revenue. In this case, inflation should climb to 4.9% this year, estimates the government, before falling from the summer, and falling back to 2.6% in 2024.
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