While the French debt has just exceeded 3,300 billion euros, alarmist speeches about the bankruptcy of the State are resurfacing. But what is it really?
3.303 billion euros of debt to be exact. France's public debt swelled further in the third quarter, standing at 113.7% of gross domestic product (GDP) compared to 112.2% at the end of June, INSEE indicated on Friday December 20. From July to September, the debt increased by 71.7 billion euros, reaching 3,303 billion euros. A figure that has gone a little under the radar during this period of vacations for the end of year celebrations and political negotiations to form the Bayrou government.
In 2000, France's debt stock was around 870 billion euros, then 2000 billion in 2016. Enough to worry more than one about France's budgetary situation. In 2007, François Fillon announced, for example, that he was “at the head of a state which is in a situation of bankruptcy”. So what can we say at the end of 2024?
“Nothing to worry about”
“There is nothing to worry about,” says Nathalie Janson, professor at Neoma Business School, on BFM Business, who recalls that “the euro allows you to take on more debt.” On the other hand, “when we compare to the United States, which is also a very indebted country, we are suffocating because we have no productivity.” No worries on paper, but France is not “on a very exciting road” either.
“There is no reason to be alarmist, France is not Greece and yes the debt is in a good position,” confirms Dorothée Rouzet, chief economist of the General Directorate of the Treasury, while recalling that investors foreigners are always present.
But “the risk is more that of slow decline than of the brutal crisis which does not exist today”, explains Dorothée Rouzet. According to her, the points of attention rather concern the loss of competitiveness of France vis-à-vis its European neighbors who “will return below 3% faster than us”. In the same way, “going into debt to pay pensions is a bit embarrassing” while other countries will rather direct it towards the growth of their GDP.
Limited trust from European partners
“We are in a current account deficit in France but it is not the fault of the French but of state spending,” insists Christian Parisot, economist, advisor to Aurel BCG. “At the European level, we have an excess of savings which explains the appetite for our debt,” he explains.
The latter also casts doubt on the limit of the confidence of our European partners, still maintained despite the persistent French parliamentary instability. “Who could have predicted a distrust of the English debt? It happened in 24 hours,” he asks. A certain “vulnerability” which proves that nothing is ever sure on the bond market.
“We are playing with fire, we must be very careful with what we communicate,” he concludes, because all it takes is a burst of mistrust from our European partners for debt management to turn into a nightmare .
