when the RN program brings up the memory of the Liz Truss fiasco in Great Britain

POLITICS – A program capable of shaking France’s financial stability? If the brief visit to 10 Downing Street of former British Prime Minister Liz Truss left a strange, lasting memory on our side of the Channel, it also left its mark on our Minister of the Economy.

By suggesting that a victory for the far right would provoke a “ a la Liz Truss » as reported Le Figaro, Bruno Le Maire envisages the worst for after the legislative elections. And now, the chaotic scenario which led to the express resignation of Liz Truss suggests that the same could be true for the French economy. Because the possibility of a large victory for the French far right in the legislative elections would allow it to implement its economic program. Which would, denounces the tenant of Bercy, have consequences not so far removed from what happened in 2002 across the Channel.

” Chaos ” British

With a mandate of 44 days, Liz Truss became on October 20, 2022 the shortest-lived head of government in contemporary history. By succeeding Boris Johnson, the ultra-liberal immediately triggered the start of a financial crisis due to his radical budgetary policy.

Named “ mini-budget », this controversial plan included massive tax cuts for the richest and energy support measures for households. But this response from Liz Truss to the cost of living crisis and inflation (nearly 10%) had especially panicked the financial markets into total incomprehension of these choices. Above all, they feared seeing the country’s debt explode with this unfunded program (but estimated at around a hundred billion pounds).

It took the intervention at the last minute of the Bank of England to calm things down. But unable to resist this crisis despite the abandonment of her tax reform, Liz Truss finally left the ship after several weeks which the British press summarized in one word: “ chaos “.

Program at risk

During a meeting to launch the legislative campaign in Normandy, Bruno Le Maire spoke of this risk for France. If the RN becomes a majority in the National Assembly, the specter of a “ debt crisis is possible », affirmed the minister three days after the dissolution.

And he’s not the only one who thinks so. The governor of the Bank of France, worried to see interest rates on French debt rise since Emmanuel Macron’s speech – the gap with Germany is at its highest since 2017 – also requested this clarification. “It will be important that whatever the outcome of the vote, France can quickly clarify its economic strategy and in particular its budgetary strategy”launched François Villeroy de Galhau, on Radio Classique this Thursday, June 13.

It must be said that France’s deficit is among the highest in the euro zone (5.5% of GDP at the end of 2023). In the hypothesis of a majority RN in the hemicycle, Bruno Le Maire affirms that France will not have “ not the means to finance tens of billions of euros” additional spending proposed by the Lepenist party and its possible allies.

Yet popular among its voters, the RN’s economic measures such as the reduction in VAT on electricity, fuels, gas and fuel oil, the establishment of a zero-rate super loan or tax exemptions on income for those under 30 now makes people fear the worst.

Towards an explosion of the public deficit

To be convinced of this, it is enough to look at the projections around the RN program for the last presidential election. Analyzed by the Montaigne Institute, the far-right measures in favor of retirees and the purchasing power of households would cause the public deficit to increase by 101.8 billion euros per year. And it is not the savings envisaged on the reduction of social expenditure in favor of immigration which would be enough to lower the score.

Several economic experts from AFP share this observation. “The RN’s economic program, which would significantly increase the state deficit, could trigger a public debt crisis if it were to be implemented”notes Sylvain Bersinger, of the Asterès firm, who also sees a parallel with Liz Truss’ program.

The situation on the markets “illustrates fears of deterioration in the credit quality of France compared to Germany and this is linked to the expensive nature of the possible measures from a budgetary point of view” in the event of a victory for the RN, adds Lionel Melka, manager of Swann Capital. It remains to be seen what measures the RN would (or could) really apply, as the far-right party blows hot and cold on the content of its program. Depending on where the electoral wind blows him.

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