Staggered recruitment, reduced professional training aid… To respect its commitment to repairing degraded public finances, the French government will make clear cuts in public spending in 2024. In total, there are 10 billion euros in additional savings which were announced for this year 2024 by the Minister of the Economy Bruno Le Maire, out of a total of more than 660 billion euros in budgeted expenditure.
The executive’s objective? Hold the public deficit at 4.4% of gross domestic product (GDP), facing a growth forecast lowered to 1% in a context of geopolitical tensions and economic slowdown. This new tightening of the screws adds to the 16 billion savings already included in the budget for 2024, mainly coming from the removal of the energy shield.
It comes before the highly anticipated decision of the main rating agencies on the rating of French debt: April 16 for Moody’s and Fitch, May 31 for S&P. Paris fears a deterioration of its financial rating.
Greece, the dunce cap of Europe
France has reason to be worried. It is one of the bad students, compared to its European neighbors. According to data compiled by Eurostat, the Statistical Office of the European Union, the highest ratios of public debt to GDP at the end of the third quarter of 2023 were recorded in Greece (165.5%), followed by Italy (140 .6%) and France (111.9%). Just behind France are Spain (109.8%), Belgium (108%) and Portugal (107.5%). These figures are much higher than the euro zone average (90.3%), the EU average (83.1%) or even Germany (64.8%).
Conversely, other EU member states have much lower public debts. This is the case for Estonia (18.2%), Bulgaria (21%), Luxembourg (25.7%), Sweden (29.7%) and Denmark (30.1%). ).
Between 2019 and 2023, France is one of the countries in the euro zone whose debt has increased the most, going from 97% of GDP before the Covid-19 pandemic to almost 112% in 2023. Belgium, l Italy and Spain experienced an increase of around ten points in their debt over the same period, remember The world. In its latest analysis of euro zone countries, the S&P rating agency singles out four countries: Italy and Spain, having “high debt, in moderate reduction” as well as France and Belgium, which have “stagnant high debt”.
The rise in French ten-year bonds
In the Netherlands, on the other hand, the debt level has already returned to its pre-pandemic level. Greece and Portugal recorded a decline in their debt between 2019 and 2023. “For the vast majority of European Union countries, the debt level is now improving and close to returning to its pre-pandemic level,” note to of the world Federico Barriga-Salazar, of the Fitch rating agency.
As the daily indicates, the increase in interest rates decided by the European Central Bank (ECB), which went from 0.5% to 4% between July 2022 and September 2023, means for States a jump in price at which they finance themselves. Interest rates on ten-year French bonds, which were still at 0% at the end of 2021, are currently at 2.9%.
This surge in interest rates has consequences for the public accounts: interest on the debt, amounting to 39 billion euros in 2023, will amount to 74 billion euros in 2027, according to forecasts from the Ministry of Economy. Some good news, however: interest rates have been falling sharply on the markets recently and a reduction in those of the ECB could be announced next June.