lThe explosion of the public deficit is not a cyclical problem. For almost forty years, French public debt has only increased. To these public deficits have been added for almost twenty-five years the foreign deficits that have been accumulating and, consequently, the foreign debt that is increasing.
The current budget crisis is just the indicator of a growth model that is losing strength. Therefore, reducing deficits can only be done by attacking their roots: the progressive atrophy of our productive fabric, with an economy that is increasingly unbalanced between consumption and national production, and increasingly dependent on public spending.
The French economic model was built on consumption, and the deindustrialization of the last forty years has only accentuated dependence on this lever of growth. Demand support and deindustrialization perpetuate themselves in a vicious circle from which it is increasingly difficult to escape: stimulating demand is beneficial for short-term growth, but at the cost of an increase in imports (especially strong as the country is deindustrialized). and a deterioration in our competitiveness: prices are rising, driven by activity in sectors protected from international competition. The corollary of this greater support for demand is, therefore, to reorient activity towards protected sectors, in particular services or construction, to the detriment of the manufacturing sector.
A trend that the single currency has further reinforced: thanks to the euro, France was able to pursue expansionist policies without worrying about external deficits that were accumulating and seemingly painless… while our deindustrialization accelerated. This support for demand has included in particular an increase in social spending (more particularly on pensions and health), which has increased in the last forty years by 16 points of gross domestic product (GDP) in France, compared to 4 points of GDP in Germany. or in Switzerland, and that even fell in Sweden (1.5 points) during the period.
An injection of public money
Today, it is the very sustainability of our growth model that raises questions. The gap between almost continuously stimulated consumption and stagnant industrial production can only be closed at the cost of an increase in external debt: while in 1999, France had a net debt to the rest of the world that represented almost 15% of GDP, This situation gradually deteriorated. reach an external debt of −37% of GDP in 2023.
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