In their latest weather report on the homeland of “whatever it takes”, forecasters from the International Monetary Fund blow hot and cold. “Overall, the risk of France defaulting is low and its debt is sustainable,” they say. On the horizon, however, the sky is darkening, and the IMF’s concern goes from “low” to “moderate”: “With the increase in interest rates, which weigh more and more on the debt, and the maturing of low-rate borrowings, the favorable effects on debt dynamics will dissipate in the longer term, requiring ever greater efforts to stabilize it. In other words, the wind is picking up, and it is bad for our public finances…
Eclipsed by the national consensus around the budgetary response to Covid, and by the “magic money” linked to the devilishness of negative interest rates, the debate on the debt is making a comeback, against a backdrop of rising key rates of the European Central Bank and rising inflation. Not without spoofing, as often, its share of shortcuts. “Our children are going to drink!” Some shout, arguing about the almost 3,000 billion euros in debt that France drags like a ball, but forgetting the redistributive effects, through public spending and inheritance, to within each generation. “Let’s cancel the part of the debt held by the ECB!”, proposed the others, the said part being in reality contracted by the State with regard to the Banque de France, itself in the hands of the State, or how to dress Paul… by undressing him.
To see clearly, the Minister of Public Accounts, Gabriel Attal, and the “appalled” economist Thomas Porcher gave a long interview to L’Express. The two men differ on the urgency to act, the centers of savings, the place of France in the world concert of pierced baskets… They nevertheless share the same observation on the obligation to maintain an economic activity and a market of the dynamic employment, the only ones capable of generating a surplus of revenue, which, by reassuring our creditors, removes the specter of a runaway debt.
Growth, fragile refuge against the storm in sight. And the government’s only hope of proving Daninos’ Major Thompson wrong, and his definition of the carefree French: “people who go out without an umbrella on the pretext that it’s not raining.”