METROichel Barnier, our new prime minister, wants to get to the truth about the financial debt that weighs “on the shoulders of our children”. The concern is laudable: to ignore the constraint imposed on us by this debt would be irresponsible. To be mistaken about the nature and intensity of this constraint, while the deterioration of our public services, as well as the deterioration of living conditions, “people from below”This seems to be the subject of a widely shared observation, but it would be equally dangerous! Unfortunately, the proliferation of anxiety-provoking comments on the subject risks contributing to this.
Contrary to what is often repeated, our current debt will not have to be “paid” by our children: they will be able to honor the matured securities by issuing them in turn, as has been done for a long time in all developed countries, new debt securities. Their only obligation will be to pay the interest owed. As long as the rate at which the issued securities are remunerated does not exceed, on average, that of GDP growth, our children will be able to cope with the interest burden on the debts we bequeath them without a “hellish spiral”. . ‘ begins: this interest burden will not weigh more on their income than it weighs on ours today.
So, contrary to what is often repeated, we still find ourselves, despite the recent rate hike, in a favourable configuration: the pace at which the value of our GDP increases is greater than that at which we have borrowed in the past, on average, paid. However, in relation to GDP, the weight of our debt is increasing because our budget revenues have been, for several years, “very” lower than our expenses, excluding interest charges. It is this recurring “primary” deficit that increases the weight of our public debt and its interest burden on GDP.
Rationalize public spending
The risk, if this deficit persists, is that this burden will become ever heavier. It is not the debt that will weigh on the shoulders of our children but the mismanagement of public spending. Those who lend to us will certainly continue to do so, at least for a while, but in exchange for an ever-increasing “risk premium”, which will only accelerate the increase in the weight of our debt… and our burden of debt. . . interest. The latter will eventually become unbearable… For the moment, we are still far from that: despite the increase in the weight of our debt in relation to GDP, the interest paid by our State remains significantly lower than two decades ago.
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