“Without fundamental reflection on the relevance and effectiveness of public spending, France will never be able to escape the vicious circle of debt”

2023-10-02 06:00:27

In just a year, France will pass an inglorious milestone. For the fiftieth consecutive year, the government will present a budget in deficit. More than the country’s inability to adjust its spending to its revenues for half a century, it is the cumulative effect that is dizzying, resulting in a mountain of debt now exceeding 3,000 billion euros.

If we refer to the rate of debt reduction which is anticipated in the public finance programming law (LPFP; the budgetary trajectory until 2027), fifty years is also the time it will take to bring the debt level below 60% of GDP, as required by our European commitments.

In the meantime, Bruno Le Maire will present the 49th budget in this desperate series to the National Assembly in mid-October. “The first ambitious step to accelerate our country’s debt reduction and reduce our public spending”, proclaims the Minister of the Economy. Even! Despite the claimed “ambition”, France will still have to borrow 285 billion euros to complete this finance bill. This does not prevent part of the left from continuing to talk about ” austerity policy “. No laughter.

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Of the 16 billion savings proudly displayed for 2024, 90% of the amount corresponds to the elimination of exceptional aid linked to the fight against inflation. In other words, prowess is a one-shot gun: from the following year, we will have to find other expedients to hope to satisfy the roadmap of the LPFP, which provides for 12 billion savings each year until 2027!

Collective inconsistency

The government’s method is to systematically look at the glass half full. Growth, inflation, interest rates, ability to make savings: all hypotheses are based on a rosy scenario which is not shared by any economic institute. Even with this relatively improbable alignment of the planets, France will only just get back into compliance with the European Growth and Stability Pact by falling below the 3% deficit in 2027. The level of debt would remain almost unchanged.

The achievement is quite relative: we would be the last European country to achieve this deficit objective. Despite this, it was impossible to find a majority in Parliament to vote for the text, forcing the Prime Minister to activate article 49.3 of the Constitution, while its adoption is a condition sine qua non to benefit from the European recovery plan. This lack of political consensus illustrates our collective inconsistency on the subject of debt.

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