For the first time Since the anomalous period of 2008, French government revenues are On par with Spanish. If Paris used to pay much less to borrow on the markets than Madrid, that is no longer the case today. Both pay off over a decade. Just under 3%. Last year the cost of debt And it decreased for all eurozone countries. But while the Spanish index fell 0.9% (and the Italian 1.1%), its French counterpart fell only 0.4%. Then last month France is the only major European country that has not benefited from recessions. From the proceeds.
French debt level is not up to Italian values (134% of GDP) But not even that far, as it reaches 110% of GDP. Changes in interest rates therefore have significant impacts on public finances, which are already in serious difficulties. The deficit May exceed 6%That is more than double the limits set by Brussels. The new and young finance minister, Antoine Armand, He described it as “debt.” “The worst in history” Expressing his hope for a dialogue with social partners in order to “restore public finances.” He ruled that “the situation is serious.”
In 2024, France sold bonds worth 285 billion euros It is planned to be released in 2025. 315 billionof which 150 will be used to replace expiring bonds. This amount, however, Based on an estimated deficit of 5.1%Another point that means having to assemble. 27 billion more About. Unless you choose to reduce expenses and/or increase taxes.
Last weekend, the Prime Minister Michel Barnier said the richest French companies and multinationals could be asked for an “exceptional contribution”. The Finance Minister resumed on Tuesday.We will no longer tax workers.“For people who are in the middle class,” Armand said. Conversely, “people who have great wealth, who sometimes do not pay, among other things, a lot of taxes… They can contribute more. In the current situation”.
These are the hypotheses that need to be evaluated. Barnier To develop the budget law which will then be presented to Parliament. OctoberIf he crosses this line, it will constitute a reversal in direction for the policies that Macron has been pursuing on the basis of. Tax cuts For families and businesses. A political approach that has not generated the hoped-for support for the economy, Contributing to the sinking of public finances.
The new government can count on it. Limited supportThis is guaranteed by the conservatives and a few parliamentarians from Macron’s party. The executive is clinging to a kind of no-fight pact with the far right, to which Le Pen belongs. If the left stands against the government, the executive has no chance. Barnier will have to try to strike a balance. To face a situation that requires difficult choices in any case.
Borrowing is likely to be the simplest path, at least in the end. Right away. Paris will have no problems. To sell his debts Which, in fact, with higher interests becomes more interesting for investors. Moreover, Germany will have very little recourse to markets next year, leaving more room for other sources of emissions. A new reduction in the cost of money by The ECB could take some chestnuts off the fire in Paris.
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