Public debt: is France on the brink of a financial crisis?
To justify his submission to this vote of confidence, Prime Minister François Bayrou says he wants to raise awareness of the seriousness of the public finances. But are they really worrisome? Is there a risk of a financial crisis? Here are some answers.
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More than 3,411 billion in public debt , Tuesday, August 26, at 7 p.m., and a counter that is climbing at full speed: 5,000 euros more every second. A record debt that is becoming more and more expensive, because the State must pay ever higher interest rates to borrow on the markets.
The movement has been accelerating since Monday. "We're still seeing a two-day increase that's quite strong. So, there's tension on the bond side, and that means France is borrowing more expensively today since François Bayrou's announcements," explains Andréa Tueni, head of markets activities at Saxo Bank.
The ten-year rate is currently at 3.49% in France, higher than Spain's (3.24%). And it could quickly rise above Italy's (3.51%). The markets are making France pay a high price, believing that the current deficits are no longer justified, as this expert explains. " We've cut a whole bunch of taxes, we've increased a whole range of spending, but there's never been a trade-off between the two. Normally, when you cut revenue, you adjust spending. That hasn't been the case in France ," says Philippe Waetcher.
Debt repayment is expected to be the state's largest expenditure this year, at €66 billion, ahead of the national education and defense budgets. Faced with these figures, Prime Minister François Bayrou is sounding alarmist, even raising the risk of France being placed under supervision by the International Monetary Fund (IMF). But economists agree that France is far from bankruptcy.
" We are not in the same situation as Greece in 2010 when the IMF intervened. I think our situation, at this stage, is not dramatic, but if we do nothing to improve public finances in five or ten years, it will indeed become dramatic ," warns economist Sylvain Bersinger. In the meantime, the state is still managing to finance itself easily. At the beginning of August, France borrowed more than €4.5 billion over ten years.
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