Lhe Prime Minister, François Bayrou, has just delivered his draft budget. Based on an alarming diagnosis, he announced that the public deficit in 2026, estimated at 4.6 % of the gross domestic product (GDP), or 140 billion euros, would be 0.8 points lower than that scheduled for 2025, which is not quite sure that it will be carried out. Between 2024 and 2026, the cumulative budgetary effort – the sum of all tax increases and expenses – should be 1.7 GDP point, or 50 billion euros. The potion is bitter and violent. It is only initiating an even more severe program, if we are to believe the budget program in the medium term, updated in April.
The situation is alarming, for sure. The public deficit of 2024 induces an increase in public debt of more than 3 points of GDP, which it is imperative to control. This control is necessary for the French State to continue to borrow from moderate rates. Public debt is still considered a safe asset, and everything must be done to consolidate this status, so that the only question it raises remains that of equity between generations.
France is neither the Greece of the years 2009-2011 (public finances out of control, accounting manipulations, abandonment by partners) nor Ireland or the post-financial post-crisis (heavy external imbalances, private debts and banking systems in agony). But the confidence of the European Central Bank, European partners or financial markets is nonetheless a major issue.
This requires reducing the public deficit quickly and effectively, but also not to give in to panic and to endeavor to restore confidence in the future of France. Beyond the public deficit, the country suffers from many ailments: an overly high savings rate, an activity rate of insufficient seniors, public services whose quality is lower than that of its partners, and which are essential for the future, investments that are too long deferred in the environmental transition, as well as insufficient production for security, which would require both quantitative and qualitative efforts.
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