MMichel Barnier, our new Prime Minister, wants to tell the truth about the financial debt that weighs “on the shoulders of our children”. The concern is laudable: to ignore the constraint that this debt imposes on us would be irresponsible. To be mistaken about the nature and intensity of this constraint, while the deterioration of our public services, like that of living conditions “people from below”seems to be the subject of a widely shared observation, would however be just as dangerous! The multiplication of anxiety-provoking remarks on the subject unfortunately risks contributing to this.
Read also | Article reserved for our subscribers France’s debt, which exceeds 3,000 billion euros, remains under the surveillance of rating agencies
Add to your selections
Contrary to what is often repeated, our current debt will not have to be “repaid” by our children: they will be able to honor the maturing securities by issuing in turn, as has long been done in all developed countries, new debt securities. Their only obligation will be to pay the interest due. As long as the rate at which the securities issued will be remunerated does not exceed, on average, that of GDP growth, our children will be able to face the interest burden of the debts that we bequeath to them without a “deadly spiral” starting: this interest burden will weigh no more on their income than it weighs on ours today.
Then, contrary once again to what is often repeated, we are still, despite the recent increase in rates, in a favorable configuration: the rate at which the value of our GDP is increasing is higher than that at which our past loans are, on average, remunerated. Compared to the GDP, the weight of our debt is nonetheless increasing because our budgetary revenues have been, for several years, “very” lower than our expenses, excluding interest charges. It is this recurring “primary” deficit which increases the weight of our public debt and its interest burden in the GDP.
Rationalize public spending
The risk, if this deficit persists, is to see this burden weigh ever heavier. It is not the debt that will weigh on the shoulders of our children but the mismanagement of public spending. Those who lend to us will certainly continue to do so, for a while at least, but for an ever higher “risk premium”, which will not fail to accelerate the increase in the weight of our debt… and our interest burden. The latter will then end up no longer being bearable… We are, for the moment, still far from that: despite the increase in the weight of our debt in relation to GDP, that of the interest paid by our State is still significantly lower than it was two decades ago.
You have 50.39% of this article left to read. The rest is reserved for subscribers.
