Is this the effect of the electoral campaign? Or the heat wave, which acts as an anesthetic? The wave of panic that has gripped the bond markets for several days, justifying an emergency meeting of the European Central Bank on Wednesday June 15, seems to leave France in a curious state of indifference.
The challenge for public finances, and more broadly for the five-year period which is coming, is however far from neutral. The rate at which France is financed on the markets, which has been increasing continuously since the start of 2022, has risen sharply in recent weeks, in the wake of fears around Italy. At 2.24% on Wednesday June 15, it was three times higher than Bercy’s projections for the year. A 1 point increase in rates increases the interest expense from 2 billion to 3 billion euros the first year, and more after that, “eventually, an additional annual cost of nearly 40 billion euros, almost the current defense budget”, has recalled the Governor of the Banque de France, François Villeroy de Galhau, Tuesday May 10.
“We are in an election period, so no one wants to talk about austeritynotes Ludovic Subran, chief economist at Allianz. France also benefits from the fact that Italy is in a more worrying situation. But the fundamental problem remains: interest rates are rising everywhere in the euro zone and, for a country that is not a model of budgetary orthodoxy, this will weigh on debt servicing. »
“No wind of panic”
Sent to France Inter, Wednesday June 15, the Minister of the Economy, Bruno Le Maire, assured that there was “no wind of panic” on the part of the monetary authorities, seizing on the contrary the opportunity to recall the need to give a majority to the government during the second round of legislative elections, Sunday June 19, the only one capable, in his eyes, of fighting against the fragmentation of the euro zone against a left-wing alliance presented as anti-European. “Faced with this rise in rates, do you really think that it is time for France to go aside, explain that it is not going to repay its debt and that it is alienating its partners? Europeans? », did he react.
During the campaign, Emmanuel Macron pledged to reduce the deficit from 6.5% to 3% by 2027
However, the situation of its public finances does not place France in a very comfortable position. At the end of two years of health crisis, the debt approached 113% of the gross domestic product and the deficit, 6.5%, at the end of 2021. France is, moreover, one of the countries which have spent the most to counter the effects inflation since the fall of 2021.
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