It is an era full of dangers that is opening up for French public finances. Bruno Le Maire, Minister of Economy and Finance, and Gabriel Attal, Minister in charge of Public Accounts, yesterday presented more ambitious targets for reducing deficits and debt than expected.
An acceleration to return to the nails of Brussels, of course, but also and above all because France no longer has the means to borrow due to the rise in interest rates. For the first time since the early 2010s and the sovereign debt crisis in Europe, France must build its budgets and financial trajectory with interest rates above 3%.
A radical change from recent years when France could almost borrow without having rates close to zero. A cycle that allowed, among other things, to finance the tax cut, the “whatever it costs” of the health crisis, the recovery plan or even the energy shield.
Debt load skyrockets
But that era is over. In 2027, the debt burden will be the main item of State spending, with 71,000 million euros. By way of comparison, France will spend $44 billion on defense this year and $60 billion on national education.
Slowly but surely, the French debt is already running. It increases by almost 15 million euros per hour! And the debt burden will increase by 55% over the five-year period. As a result, ministers no longer hesitate to use angry words.
Formulas designed to reassure our European partners who have already begun to clean up their public accounts.
The message is also addressed to rating agencies that regularly update their assessment of our public finances, starting with Moody’s, which will release its French rating update tonight after market close. Then it will be Fitch’s turn next week and Standard & Poor’s in early June.
Source: BFM TV
