French public debt grows less than GDP in the second quarter

The French public debt, which has increased massively since the health crisis, slowed its progression in the second quarter, with an increase of 6,200 million euros, reaching 2,916.800 million euros, the ‘Insee announced this Friday.

The increase had been much higher in the previous three months (+88.8 billion euros). The public debt to GDP ratio, however, fell to 113.3% at the end of the second quarter of 2022, compared to 114.7% at the end of the previous quarter, detailed the National Institute of Statistics. This fall is explained by the increase in the value of the gross domestic product, specifies the INSEE.

The increase in the gross debt of public administrations is due to that of the State debt (+16,300 million euros) and that of local public administrations (+2,700 million). For their part, the social security funds and the various central government agencies reduced their contribution by 9,300 million and 3,500 million respectively.

Maastricht Rules suspended

In the first category, Urssaf Caisse Nationale (formerly Acoss) and Unédic redeemed debt securities, while the Social Debt Amortization Fund (Cades) is indebted for 5,600 million euros, says INSEE. In the case of several central government agencies, SNCF Réseau (-2.8 billion), France Competence and Bpifrance Participations are reducing their debt.

The Maastricht European Treaty of 1992 set a public debt limit for States at 60% of GDP, which France exceeded at the end of 2002, and has not been lowered since then. But since the health crisis, this rule, like that of a public deficit of less than 3% of GDP, has been suspended. At the end of May, this suspension was extended until the end of 2023 due to the economic consequences of the war in Ukraine. At the end of 2019, before the Covid-19 crisis, French public debt stood at 97.6% of GDP.

During the presidential campaign, Emmanuel Macron promised to restore the state of public finances during his second term, bringing the public deficit below 3% of GDP by 2027, which would allow the debt burden to begin to be reduced.