Tribune. The electoral campaign opens with an escalation of illusory budgetary promises. The candidates do not evoke a worrying reality: the 425 billion euros spent during the Covid crisis to maintain our productive apparatus and our standard of living increased the French public debt by 15 points of GDP.
Here we are at the level of Italian debt before the 2012 crisis (118% of GDP). For now, thanks to the action of the European Central Bank (ECB), France is financing its loans at zero interest rates, a real boon for thinking about investments for the future. However, in the longer term, no one knows the market conditions that will make it possible to refinance these maturing debts.
Thus, it remains very unwise to believe that the Covid era opens the way for us to infinite debt at zero rate to finance demagogic economic programs. One of the high probability assumptions is the increase in interest rates. This rate hike will weigh on the State’s future budgets and reduce its capacity to support the economy of the moment.
Manage the urgency of the health crisis
Ignoring this future risk borders on political irresponsibility. It is our belonging to the euro zone which, thanks to the rigor of the “northern” countries (Germany, the Netherlands, Austria), allows us to reassure our lenders of our ability to stay the course in budgetary matters. Without the Germanic “rigor” (the undervaluation of the euro benefits Germany’s competitiveness), we would not have been able to finance ourselves at such attractive rates.
Thus, economic programs must start from this postulate – the strengths of our membership in the euro zone – to propose a transparent, legitimate and common sense economic program. From the end of 2022, our budgetary commitments to Brussels will again be closely scrutinized.
Let us recall that the stability pact, which imposes a certain form of budgetary austerity, was only suspended to manage the urgency of the health crisis. It will also involve demonstrating to our partners that the 40 billion euros in European subsidies granted under the “Next Generation EU” plan have indeed been invested in the sectors concerned (ecological, digital transition, etc.) and have not been used to finance current spending such as lowering taxes or increasing social spending.
An unprecedented situation with the Covid crisis
So far, we have been spared the lightning strike of the financial markets as we have continued to maintain consistently in deficit budgets. However, from 2012, Italy and Spain, not to mention Greece, had to drastically reduce their social spending at the time of the sovereign debt crisis.
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