The S&P agency will deliver its rating of French debt this Friday, November 29. This comes against a backdrop of increasing borrowing rates in France. However, can we compare the crisis in France to that of Greece in 2010? Catherine Mathieu, economist at the OFCE, doubts it.
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How did the Greek crisis start?
At the end of 2009, a new Prime Minister, the socialist Georges Papandreou, came to power. He revealed that the deficit and public debt figures, communicated to the European Union by the previous government, were underestimated. This has eroded market confidence in Greek debt. Lenders demanded higher ten-year interest rates. These increased gradually, until reaching a peak of 30% in June 2012. In comparison, today, France borrows ten years at 3%.
What responses were given?
A rescue plan was implemented under the aegis of the “Troika” (European Central Bank, International Monetary Fund and European Commission). The latter demanded structural reforms, in exchange for loans (289 billion euros, Editor's note). Greece had to privatize parts of its economy, such as the port of Piraeus. A very severe austerity policy was introduced. Health and pension costs, as well as salaries, have been reduced. Daily life for households has become very difficult. Poverty has increased sharply.
Can we compare France today to Greece in 2010?
No, France is not Greece. First, the demographic and economic weight of France and Greece are not comparable. Greece has 10.5 million inhabitants and a GDP per capita (gross domestic product) of around half that of France. As for the Greek public debt, it now stands at 152% of GDP compared to 112% for France. And France's capacity to raise taxes is much greater than that of Greece, which has experienced significant tax evasion.
