2023-11-19 20:04:08
Published on Nov 19, 2023 at 7:04 p.m.
France’s public finances are clearly entering a zone of turbulence. 10-year debt rates are returning to their 2011 level… a year which was marked by the sovereign debt crisis. More than 3.5% on the 10-year debt in mid-October, 3.3% on November 8, this could continue to rise while the government is counting on the fact that rates will not exceed 3.6%. by 2027.
Even if the ministers of the rue de Bercy understood that the debt burden was going to become one of the major subjects of the coming years, they seem helpless in the face of the dark clouds which are accumulating. Agence France Trésor has certainly managed the cost of public debt very well in recent years with all the technical expertise that we know of, but it has reached the end of what it can do.
More than 200 billion in debt
The coming years will see France enter a spiral in which we will have levels of maturing debt that will have to be refinanced, of more than 200 billion per year in 2025 and 2026. According to estimates from the IFRAP Foundation, then that the share of the cost of debt in the State deficit represented 13% in 2019, it would weigh more than 50% in 2027 with more than 80 billion annual cost in budgetary accounting in 2027; and this if 10-year rates do not rise above 4.5%, which is no longer improbable at all!
As a result, the expected drop in the public deficit in 2024 to 4.4% is largely based on “optimistic” growth anticipated at 1.4%, instead of +0.8% expected by the consensus of economists. This allows, vis-à-vis Brussels, to display a stable debt at 109.7% of GDP whereas, if we apply 0.8% growth, the debt starts to rise again (110.8% according to the OFCE) and the deficit would remain at -4.9% in 2024, as deteriorated as in 2022.
This would make France, in 2024, the bottom of the eurozone with the widest deficit level. We can therefore have enormous doubt about the country’s ability to drop the public deficit below 3% by 2027; but this objective is above all political in order to avoid being placed in procedure for excessive deficit… in 2024 when the Maastrichian rules will be reestablished. This is also what was underlined by the High Council of Public Finances, which judged the government’s growth forecast “a little too optimistic”.
The Pavlovian sampling reflex
The trompe-l’oeil will not be able to last long on the public spending side but also on the revenue side. Hence the second well-known Pavlovian reflex: the increase in compulsory deductions, for example by attacking reductions in charges (removal of exemptions from social contributions from 2.5 SMIC) and tax loopholes (Pinel, PTZ , etc.). To date, the new contributions envisaged have not been voted on (on plane tickets, on motorway companies, etc.), but we can bet that these subjects of exceptional taxes will come up again and again.
The urgency should therefore be, with now a public debt burden anticipated by the government (and undoubtedly reduced) to 84 billion euros in 2027, to achieve primary balance in the public accounts as quickly as possible by taking action. priority on expenses. This would then be a strong sign materializing our determination to clean up our public finances.
Since the lever of public revenue cannot be activated without destroying our competitiveness, it remains that of economies. The objective of 12 billion real savings per year, without gimmicks, from 2025, will be essential for the future.
Agnès Verdier-Molinié, director of the IFRAP Foundation, published “Where is our money going? » published by Editions de l’Observatoire.
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