“To rest or to be free: you must choose”. In the preface to the book celebrating the 25th anniversary of Euronext (Editions Télémaque), Stéphane Boujnah, its president since 2015, takes up Thucydides’ words to explain the success of the first stock exchange platform in the euro zone. This former all-round banker, who worked at Credit Suisse, Deutsche Bank and Santander, came to L’Express to talk about the seven stock exchanges he manages: Paris, Dublin, Oslo, Milan, Amsterdam, Brussels and Lisbon. French news has taken over. Because Stéphane Boujnah is also – especially? – a political animal.
Son of a worker and a teacher, co-founder of SOS Racisme in 1984, former advisor to Dominique Strauss-Kahn at Bercy, member of the Socialist Party until 2013, this “social liberal”, as he defines himself, wears a a dark look at the current turn of the debate around pensions, which sidesteps the only question that is valid according to him: that of capitalization.
L’Express: To curry favor with part of the left, and avoid censorship, the Bayrou government is reopening the debate on pensions. Eric Lombard, the Minister of the Economyaffirms that everything is on the table, including the legal retirement age raised to 64 by the 2023 reform. Why do we never hear about another subject: long-term retirement savings, otherwise says capitalization, which could be invested in French, or even European, companies?
Stéphane Boujnah: This is a paradox that the former governor of the Bank of France, Christian Noyer, perfectly noted in the report he submitted to Bercy last April. The household savings rate in Europe is one of the highest in the world: 13.3% of disposable income. A large part is oriented towards the financing of public debts, a movement encouraged by direct tax incentives, as in Italy and Spain, or indirect, as in France, via life insurance. The other part is largely exported to the United States, due to an efficient allocation of the return on savings, which leads to its placement in growing areas. It is obviously necessary to build an environment in which European savings finance European businesses more.
Where does this hiatus come from? A fundamental difference with the United States. There, if you want to have income when you’re too old or too tired to work, you need to invest in stocks when you’re young. In Europe, and particularly in France, you simply have to hope that, when the time comes, the people around you will continue to work, and pay social security contributions and taxes. However, only stocks are suitable for long-term savings, and therefore for retirement savings.
It’s often said that BlackRock, America’s largest asset manager, is huge. But it is perfectly logical in a country where retirement is private, funded, and in which the federal state is small. In France, it is the opposite: Amundi is a much smaller player than its American competitors, but the State is enormous, since 58% of GDP is absorbed by public spending.
The power of American capitalism can be explained as much by the source of technological innovations as by the source of savings provided by the retirement financing system. The size of American equity capital available for massive investment in the four corners of the world is the result of the savings effort of Americans, who need to finance their retirements.
Two things are striking when traveling to the United States. As soon as we arrive at the airport, we see a lot of older people working: these are those who were not able to save during their professional life to stop sooner. And when someone asks me what I do for a living, the question that follows systematically concerns my current feelings about the Dow Jones or Nasdaq indices. Whatever the social category of the people we speak to in the United States, the Stock Market is a central subject for them. Because that’s where their retirement is at stake.
Another report, that of Mario Draghihighlighted the European disconnect in terms of business financing. When will we move from observation to action?
Since the release of the Draghi report, certain discussions in Brussels sometimes remind me of Alcoholics Anonymous meetings: “I tried, I can’t do it” or “I’ll start tomorrow, I promise!” How to get out of moaning or resignation? There is an old debate in France which would like to make pay-as-you-go and capitalization systems a zero-sum game: if we promote the second, we siphon off the first. This is false. Three European states have very powerful pension funds, which provide this funded retirement: the Netherlands, Sweden and Denmark. And it does not seem to me that these are countries where social cohesion is particularly deteriorated.
In each of them, and beyond geographically diversified investments, a neighborhood capitalism has been established, driven by dynamic equity markets, which makes it possible to finance local businesses through household retirement savings. On the Paris Stock Exchange, there are 768 companies listed: this is six times more than on the Amsterdam Stock Exchange, which is also part of Euronext. But the total capitalization of the first, close to 3,000 billion euros, is only twice as large as the second.
One of the explanations is that there is, in the Netherlands, a source of long-term savings which needs to be invested in equity, and which benefits local companies. It is impossible to achieve the objectives of the Draghi report if we do not mobilize more of the savings of European households, and a fortiori French ones, in retirement savings funds.
How to do it?
In France, the life insurance regime must be reviewed so that the tax incentive shifts from euro funds to equity funds. In Germany, the Scholz government had an ambitious project to set up pension funds. It was suspended due to the breakup of the coalition, but if the conservatives win in the next elections, it should be resumed.
To be respected by the rest of the world, and to be able to continue to live as we wish, in a sovereign manner, we must invest much more than today. What does the Noyer report say? Between now and 2030, Europe must invest nearly 1,000 billion euros more each year: 700 billion in the green transition, 125 billion in the digital transition, and the rest mainly in defense. We are not going to find these 1,000 billion by increasing compulsory contributions. I repeat: the only solution is to equip ourselves with financial instruments, well calibrated from a tax perspective, to encourage households, with the objective of preparing for their retirement, to invest their long-term savings in equity. businesses. And not to continue to finance public spending, as some insist.
If nothing is done, the French debt burden alone, which exceeded 50 billion euros in 2023, will jump to around 70 billion in 2027. These almost 20 billion more represent roughly the annual budget of the gendarmerie and of the police. This is where we are: in two years, we erase the amounts allocated in our country to internal security… And this money that we pay in the form of interest to the rest of the world to finance our deficits, we take it from the French by tax.
I often meet people around the world who lend to France. We must borrow almost 350 billion euros this year to finance our collective choices. Those who lend to us know the orders of magnitude perfectly: 1,600 billion in public spending each year, including around 850 billion in social spending, which is made up, for around 470 billion, of financing pensions.
The only important subject when the rest of the world analyzes France’s capacity to repay its debt is the question of pensions. What do the global players who lend us the money we redistribute say? Either you converge towards the dominant model in Europe, which consists of working longer, and retiring around age 67, as in Germany, Spain or Italy. Either you diverge, and we will make you pay more for the money we lend you.
It is chemically pure: working longer increases GDP and the amount of contributions, while reducing the burden of pensions. Why does France pay its nurses and teachers less than in the rest of Europe? Because its retirees are better paid than in the rest of Europe. In fact, the collective choice we make is to guarantee the remuneration of those who no longer work, to the detriment of those who work.
Is this external constraint sufficiently perceived in public opinion?
No, and it’s a major handicap. France balanced its public finances until the end of the Giscard years. Because the constraint was tangible at the time: if the accounts deteriorated, the devaluation of the franc, which was the common response, had direct consequences on the French: they went on vacation for less time, and they paid more every year. imported products.
The arrival of the euro, which also had many advantages, put public opinion under morphine. But the external constraint has not disappeared, it is simply cushioned, deferred and shared. “As long as the IMF has not placed us under supervision, nothing will change,” some of our elites are jubilant today. This approach is unacceptable, because we must resolve our problems ourselves, by teaching about this external constraint: the French understand perfectly when we take the time to explain it to them.
Remember Covid and the efforts we accepted. Every day, Professor Salomon detailed the country’s objectives in the fight against the pandemic, the constraints and the necessary compromises. Every month, Olivier Véran and Edouard Philippe did the same. And regularly, Emmanuel Macron spoke to explain the efforts required. The vast majority of society joined and we applauded our caregivers in the evening.
I suggested to some political leaders that they do the same thing on debt and deficits: tell the French, at regular intervals and very factually, where we come from, how our neighbors are doing, where we are going, with what consequences, and what compromises are necessary. As long as this diagnosis is not shared and disseminated in public opinion, we will not move forward.
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