“France is not Greece. » Exceptional guest of the Economic Summit of Challenges this Thursday morning, in the midst of budgetary turpitude, the Minister of the Economy, Antoine Armand, engaged in a perilous exercise to defend the government's 2025 finance bill. Facing him, Yann Le Pallec, president of Standard & Poor's. The rating agency must look at French debt this November 29, while the financial markets are nervous and France is now borrowing as expensively as Greece. Former senior civil servant Augustin de Romanet, president of the ADP airport group and Paris Europlace, which brings together the major investors and issuers of the place, completed the panel.
The threat of degradation
Before the minister's arrival, Yann Le Pallec recalled the reasons why his agency had already downgraded the French debt rating, on May 31, from AA to AA-, three notches below that of Germany. (AAA). France thus finds itself alongside the Czech Republic and Slovenia. Not very shiny. “We had anticipated a reduction in public debt below 110% of GDP and a deficit remaining around 3.5% by 2027. However, it was clear that the debt was not going to decrease and that the deficit was well at -above what had been forecast in 2023, at 5.5%, which justified the deterioration. »
Since then, Emmanuel Macron has dissolved the Assembly and the Barnier government has let the 2024 accounts slide to concentrate its efforts on the 2025 budget. We published a comment saying that this does not change things but that it will be more complicated to have a consensus to pass the budget”euphemized Yann Le Pallec. The deficit is now expected to exceed 6% this year and the executive is having difficulty imposing a recovery effort of 60 billion euros for next year. S&P could place France under “negative outlook” but should not downgrade its rating again before the outcome of budgetary discussions in Parliament.
Budget recovery according to Antoine Armand
Faced with this threat, Antoine Armand tried to reassure his interlocutors about the budgetary seriousness of the government, while defending the Macronist doctrine no matter what. He recalled that France had the highest rate of public spending and compulsory taxes in the European Union and that any reasonable person should aim to reduce both. “If we systematically give in to the reduction in spending, we will not succeed (…) It is precisely because we are attacking social security spending, health insurance spending, the state's lifestyle , to public employment, that we are not in the « fat » (“Greece”), but in the « muscle »».
He called for not opposing spending reduction and economic growth, “because if we do not reduce our deficits today, the first victims will be businesses”who will have difficulty financing, recruiting and exporting. “To finance the French social model, we need more hours worked, turnover in companies, exports, we need to put the compass back on production. »
Incidentally, he welcomed the fact that the European Commission had more or less “validated”, on November 26, the government's initial draft budget and its trajectory for recovering the accounts, which still postpones the start of debt reduction to 2028. and falling below 3% by 2029. “Once is not customary, we make the most difficult effort at the beginning”he underlined, highlighting the “credibility” of the French plan.
A historical lack of seriousness
As a former member of the 2021 Arthuis Commission on the future of public finances, Augustin de Romanet was keen to recall the importance of respecting objectives. “In the Commission, there were foreigners who said, in essence, the French public finance trajectories are not very credible and our country has a very bad reputation. The objectives integrated into France's stability programs from 2015 to 2019 were only met once, while they were met every year in Germany. » Hence the ADP boss's suggestion to the minister, inspired by the Arthuis report, to create a new independent budgetary watchdog.
“It is assistance to the minister because a Minister of Finance is someone who is permanently crucified. We spend all the time asking him for expenses and he doesn't have, as it were, a reminder bar. Me, as a company listed on the stock exchange, when I have people asking me for additional expenses, I say stop there. I have minority shareholders who do not want my accounts to exceed what I announced. »
And Augustin de Romanet proposed a “Constitutional Council” of public finances, which would produce independent forecasts and monitor the execution of the trajectories.
