At this pace, the public deficit will reach about 5.9% of GDP in 2027, then nearly 7% in 2030, while France’s debt service will increase by around €10 billion per year between 2027 and 2030.
Thus, the debt could exceed 130% of GDP in 2030. That would be a catastrophe because every euro spent on paying the interest on borrowings is not invested in education, health, security, infrastructure, or — in a context of increasing international uncertainty — Defense.
No consensus across the country
The trouble is that, in France, there is no consensus either on the diagnosis or on the remedy.
On the contrary, at the end of August, the summer universities of La France Insoumise (LFI), the Socialist Party (PS) and the Greens confirmed that, for these parties, the salvation of France, a country already nearly the world champion of compulsory levies (taxes + social contributions), always lies in further tax increases and an expansion of public spending.
To the left, everyone suggests — albeit with nuances — heavily taxing corporate super-profits, possibly reducing the public subsidies they receive, making the “rich” pay more taxes, especially billionaires deemed “harmful” by LFI MEP Manon Aubry. Or, as the CFDT’s secretary-general has proposed, taxing inheritances more.
Moreover, Jean-Luc Mélenchon promotes his controversial plan to outright cancel part of France’s public debt held by the European Central Bank. This would, however, be contrary to European treaties and far from straightforward to implement. As for potential consequences (loss of investor confidence, financial crisis, etc.), they are deftly avoided.
If no agreement is reached in Parliament on the 2027 state budget — or if the budget is ultimately vetoed as LFI already hopes — the government may buy time by passing a special law, but nothing substantial will be settled.
The big picture, however, is clear: not only is France living beyond its means (no balanced budget since 1974) but it is gradually losing ground in too many areas: the historically large agricultural trade surplus has collapsed; the manufacturing industry is retreating (now representing only 9.5% of GDP, versus 14.5% on average in Europe); French GDP per capita is now below the European average; unemployment stands at 8.3% and rising; business defaults are at historically high levels…
How can this continue?
All around a table?
It too regularly faces the need to cut public spending. Recently, for instance, the reimbursement of spa therapies — valuable for boosting the attendance of spa towns — nearly came under serious review to reduce health expenditure.
In its quest for savings, the government has already cut the credits allocated to Atout France, which is tasked with developing the attractiveness of France abroad.
In parallel, many local authorities, short of public subsidies, have cut the budgets of CRT and ADT, increased the tax on secondary residences, and also the tourist tax paid in hotels, gîtes and other accommodations.
Now, municipalities and tourism professionals fear a direct government takeover of the management of this tax intended for local tourism development.
The heavier taxation inevitably weighs on the cost of stays in France, already high compared with competing destinations. Result: vacationers are tempted to shorten their stays or seek cheaper alternatives. Thus, the outlook is seen in dotted lines.
Sure, a strictly accounting approach will never build a mobilizing future for a country. But what future can a country have that is increasingly weighed down by debt? The examples above show that, unless one accepts the worst-case political stance, sacrifices will be necessary and painful.
In this context, instead of rushing to demagogy, wouldn’t it be better for all of us to sit down at a table until a reasonable consensus is reached? Admittedly, this is not in the French culture, but the seriousness of the situation and the concern for the future would require it.
Publié par Paula Boyer Responsable rubrique LuxuryTravelMaG – TourMaG.com Voir tous les articles de Paula Boyer
