After more than an hour of interview on the results of his five-year term, Emmanuel Macron’s sentence sounds like an understatement: “The debt situation in France requires vigilance. “Faced with journalists from TF1 and LCI, Wednesday evening, the Head of State spoke with lip service to France’s abysmal public debt. According to INSEE, it amounted in the third quarter of 2021 to 2.834.3 billion euros, or 116.3% of GDP. A record figure that the government had imagined even greater. The same day, the Assembly voted the last budget of the mandate. It totals an increase in public debt of more than 680 billion euros.
The LREM budget rapporteur, Laurent Saint-Martin, himself concedes: “The next five-year period will be a five-year period for consolidating our public finances”. But then, how to explain the reluctance of the various presidential candidates to evoke this sword of Damocles above the heads of future generations?
A favorable situation
To face the health crisis, many countries around the world have chosen to spend heavily to keep their economy afloat. France, for example, voted for a recovery plan of 100 billion euros, 40% of which is financed by the EU. These billions have made it possible to see growth increase (+ 6.7% expected in 2021, according to INSEE). And to encourage this improvement, the European Central Bank also announced Thursday to maintain its key rates favorable to borrowing. until March 2022. You get the perfect remedy to avoid a fever flare at the sight of the French debt.
“We talk less about public debt today because it has less urgency,” said economist Eric Heyer, director of the “analysis and forecast” department of the French Observatory of Economic Conjunctures (OFCE). It has never been higher and yet it does not cost us more. Now, growth is greater than debt and it is much less of a problem with inflation around 2.5%. “
The right assumes they want to reduce the debt, not the left
An opinion shared by Benjamin Lemoine, researcher at the CNRS and author of The Order of Debt: Investigating State Misfortunes and Market Prosperity (The Discovery, 2016). According to him, “the current low interest rates, which lower the cost of debt service, have weakened the storytelling classic which makes debt a threat and a pretext for reducing public spending. “He continues with a more political comment:” For the neoliberal and authoritarian right, from Eric Zemmour to Emmanuel Macron, the fact that the debt is no longer panicking is precisely a problem. In this wake, Valérie Pécresse, the candidate of the Republicans, former support of François Fillon in 2017 and his economic austerity program, is one of the few to mention debt reduction. She thus lambasted Emmanuel Macron for having “burned down the fund” – an expression that has flourished -, then proposed to reduce the number of civil servants in the administration by 150,000.
The reduction of public spending is therefore one of the favorite themes of the right. And with such a large debt, it is not surprising to see Valérie Pécresse attacking Emmanuel Macron on his budget management. “The Republican right is the only party to offer a fairly orthodox vision on the budgetary plan, analyzes Chloé Morin, political scientist at the Jean Jaurès foundation. All other parties agree that public debt is necessary to fuel the wheels of a highly billed society. “
Jean-Luc Mélenchon advocates the cancellation of the “Covid debt”
“If we start to say that the problem is debt, then we take away all the leeway to finance other projects such as ecological transition, public hospitals or even education”, abounds Eric Heyer. So many themes historically preempted by the left. And on this side of the political spectrum, a voice stands out: that of Jean-Luc Mélenchon, the candidate of France Insoumise. The member for Bouches-du-Rhône simply wants to cancel the debt contracted during the health crisis. “The Covid-19 triggered an increase in debt of about 20%, he said. on BFM Business last May. I start by saying: let’s cancel this 20%. “Even Fabien Roussel, the Communist candidate, does not go so far and simply mentions a partial cancellation of this” Covid debt “. “There are lines of fractures on the left on this issue, because things are considered irresponsible,” said Chloé Morin. I doubt that the PS say they want to cancel the debt because no French believe in magic money. “
Will the low interest rates on the debt last, and thus reduce the urgency to pay the bill? “They are based on how central banks view their ‘credibility’. If this credibility is based on the aspirations, desires and affects of the players in the capital markets, it is likely that they will rise again, ”predicts Benjamin Lemoine. And that the repayment of the debt does not become again a major subject in the months to come, advances Chloé Morin. “The subject is for the moment relegated to the background, but it will come back because the fear of paying more taxes tomorrow begins to increase in public opinion. “