“France will only be able to significantly reduce its public debt by strengthening its productive fabric”

LThe explosion of the public deficit is not a cyclical problem. For almost forty years, the French public debt has only increased. To these public deficits have been added for nearly twenty-five years external deficits which have been accumulating, and consequently, external debt which is swelling.

The current budgetary crisis is only the indicator of a growth model that is running out of steam. Therefore, reducing deficits can only be done by attacking their roots: the progressive atrophy of our productive fabric, with an economy increasingly unbalanced between consumption and national production, and increasingly dependent on public spending.

The French economic model was built on consumption, and the deindustrialization of the last forty years has only accentuated the dependence on this lever of growth. Support for demand and deindustrialization are self-perpetuating in a vicious circle from which it is increasingly difficult to escape: stimulating demand is beneficial for short-term growth, but at the cost of an increase in imports ( especially strong as the country is deindustrialized) and a deterioration of our competitiveness – prices are increasing, driven by activity in sectors sheltered from international competition. The corollary of this stronger support for demand is thus to redirect activity towards sheltered sectors, in particular services or construction, to the detriment of the manufacturing sector.

A trend that the single currency has further reinforced: thanks to the euro, France was able to pursue expansionist policies without worrying about the external deficits which accumulated and seemed painless… while our deindustrialization accelerated. This support for demand has notably included an increase in social spending (more particularly pensions and health), which has increased over the last forty years by 16 points of gross domestic product (GDP) in France, compared to 4 points of GDP in Germany. or in Switzerland, and which even fell in Sweden (by 1.5 points) over the period.

An infusion of public money

Today, it is the very sustainability of our growth model that raises questions. The gap between almost continuously stimulated consumption and stagnant industrial production can only be filled at the cost of increasing external debt: whereas in 1999, France had a net debt on the rest of the world representing almost of 15% of GDP, this position gradually deteriorated to reach an external debt of − 37% of GDP in 2023.

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