The ongoing increase in French public debt is the result of decades of successive budget deficits. Some deficits are justified as they are necessary to support the economy during a crisis, such as the ones in 2008 (subprime) and 2019 (Covid). However, others are not, such as those recorded during a period without a crisis, between 2012 and 2019. During this period, the French government consistently reduced its deficit from -5% of GDP in 2012 to -2.3% in 2018. Despite this reduction, France’s debt increased by 6.8 points, reaching nearly 100% of GDP (97.4% in 2019). In contrast, German governments produced budget surpluses of up to 2% of GDP during the same period, which allowed them to reduce the public debt by 21.1 points, falling below 60% of GDP (59.6% in 2019).
The inability of French governments to reduce spending is a key factor in the chronic deficits of the state. While periods of crisis may justify increased spending and budget deficits, the opposite should occur during periods of economic recovery, with a focus on reducing expenditures. Germany succeeded in reducing state spending from 48% to 44% of GDP between 2012 and 2019, while France saw its spending increase from 57% to 55% of GDP during the same period, with revenues ranging from 44% to 46% of GDP. This historical comparison highlights the French government’s struggle to control spending, even during non-crisis periods. Given the social contract in France, where high taxes grant access to generous benefits, contributions should align with the rights to benefits. The accumulation of public deficits since 1974 suggests that benefits have been provided without the corresponding contributions being respected. Therefore, it may be justified to request beneficiaries of these “overpayments” to repay them, at least partially, rather than burdening future generations with this debt.
The current outlook for the French economy suggests a recovery from the crisis, raising concerns about the potential recurrence of the fiscal imbalances observed between 2012 and 2019. Despite claims by Emmanuel Macron, the primary issue with France’s chronic deficits lies not in insufficient revenues but in excessive expenditures. To address this ongoing challenge, it is essential to focus on curbing spending and improving fiscal discipline. Given the structural issues in managing public finances, a sustainable approach would require a shift towards reducing spending, particularly during periods of economic growth, in order to stabilize and eventually reduce the public debt burden. This realignment would require a reevaluation of the social contract between citizens and the state, emphasizing the need for fair and equitable contributions in exchange for benefits and services.
As the French government grapples with the challenge of controlling spending and reducing deficits, there is a growing need to address the structural issues that have contributed to the persistent increase in public debt. The historical comparison with Germany’s successful reduction of spending and debt highlights the importance of fiscal discipline and prudent financial management. By reevaluating the social contract and ensuring that contributions align with benefits, France can work towards long-term fiscal sustainability and avoid burdening future generations with excessive debt. Implementing structural reforms and promoting greater accountability in public spending can help steer the country towards a more stable and secure fiscal future, ensuring that resources are used efficiently and effectively to support economic growth and prosperity for all citizens.
