Okay already: Why do we keep talking about debt. In fact, for around fifty years France – the State, above all, but also Social Security and local authorities – has been spending more than its resources.
Today, it is $3.222 billion in debt. So, that’s a lot. That’s a little more than 9 times Elon Musk’s fortune, and it’s a little more than 5 times Amazon’s turnover. Above all, it is a little more than 110% of the wealth produced by France in one year. In the euro zone, only Greece and Italy are doing less well.
A value that remains safe
But France remains a safe bet for investors: it has never defaulted (since the 18th century!), is not in recession and the savings rate is high. Moreover, 55% of French debt is held by foreigners. This could be banks, which need safe securities with a good return.
And that they can resell quickly, if they have to face massive withdrawals at the counter. Clever. Foreign banks, for example, hold 433 billion euros of French debt, according to Éric Dor, director of economic studies at IESEG. Pension funds, these organizations which manage funded pensions in the United States or Japan, also buy a lot of French debt
Serious, doctor?
So, is it serious, doctor? Yes and no. Unlike a household, a State is not intended to completely get out of debt. It can “roll” its debt, that is to say re-borrow to repay the holders. The latter accept, because they trust France to find other lenders when they themselves have to be reimbursed.
On the other hand, the interest rate at which France borrows increases with risk. and that, that could It could have a snowball effect. When we spend more to pay interest, we go into more debt, so we pay more interest, etc. »
Read also: Debt: why France’s borrowing rates are close to those of Spain
And this until lenders stop lending, as was the case for Greece in 2010. “To avoid it, we must ensure that confidence is maintained,” continues Éric Dor. Hence the announced rigor.
