Politics
The French Ministry of Finance asserts that at least an additional 20 billion euros in savings will be needed by 2025, after suggesting that 12 billion would suffice. The Court of Auditors estimates that 50 billion euros need to be saved by 2027... Is there a beginning of panic regarding the state of our public finances?
France's public spending has reached a level that is not only worrying for financial balances but also for the country's future. Indeed, it reached 56.5% of GDP in 2023, compared to 48.5% of GDP in the other 19 eurozone countries, which is 8 percentage points of GDP more than the average of the countries with which we share the same currency, but with no benefit for our nation. If we had public spending 8 percentage points of GDP higher than other countries but, in return, the best education in the world, the highest level of public security, the highest economic growth, and the highest level of innovation, then we would have an effective and enviable public action. But having simultaneously the highest public spending among developed countries, low economic growth with a decline in labor productivity, a drifting education system, and insecurity reaching such a level that, for the first time since the statistics on the attractiveness of countries exist, it negatively impacted this attractiveness in 2023, puts us in a very serious situation. Public action in France is ineffective, expensive, blocking for the initiative-taking, and especially tainted by a suicidal degrowth ideology. This is not the consequence of the Hollande-Macron policy since 2012 alone, as this drift has been systemic since 1981 when the government at the time increased state spending by more than 15% at once, claiming that this increase would allow the country to be renovated. In reality, it mainly created a tsunami of wastefulness at all levels of public action, accelerated by a failed decentralization by the Defferre laws in 1982, which triggered an explosion of unaccountable local spending. What was still working in 1997-1998 was broken by the Aubry laws on the 35-hour workweek, which devitalized the public service, notably the hospital system, while encouraging disastrous absenteeism. The collapse of the educational system's performance, since the Jospin law of 1989 and those that followed under the pretext of putting the child and his pleasure at the heart of the educational system rather than the pursuit of excellence and the acquisition of knowledge, has shattered the intellectual and social promotion chances of at least a third of the youth for three decades. The panic you mention about public finances is actually a systemic societal panic about the inefficiency of public action that is weighing down the nation's performance to the point of threatening its economic and political independence.
Tax revenues were lower than expected in 2023. How can this be explained when inflation should have generated additional revenue?
We are suffering the effects of the deceleration of household consumption, which, worried about the future, have significantly increased their savings effort, depriving the state of VAT revenue. The war in Ukraine does not allow Europeans to project themselves in the long term, even though the intensification of the Sino-American conflict for global dominance in digital technology, biotechnology, and space should compel us to invest massively in these areas. The weakness of the German economy slows down activity in the entire eurozone. And above all, the European Central Bank (ECB), which missed several economic turns since the crises of 2008-2009 and 2010-2012 before massively increasing interest rates in 2022-2023, has not grasped the economic crisis in the eurozone since the autumn of 2023. The situation could improve slightly in the second half of 2024 if the ECB initiates a rate cut, even a minimal one, and if the conflict in Ukraine does not escalate.
The social model is in the crosshairs of Bruno Le Maire. It is costly: 850 billion euros per year! What are the possible paths? The Finance Minister speaks a lot, highlighting the path of long-term illnesses...
Social protection costs 33.5% of GDP out of the 56.5% of GDP in public spending, almost 60% of public action. And yet, no one ever seems satisfied! When public action is ineffective and no one is happy despite massive public spending, it is time to completely restructure public action. It is urgent to reduce benefits through partial de-indexation, align the rules for obtaining unemployment benefits with those of Germany, and tighten the conditions for obtaining social minimums. For three years, pensions and disability benefits must increase according to inflation minus 1%, family benefits and housing allowances must increase according to inflation minus 1.5%, and social minimums according to inflation minus 2%. Local authorities must contribute by freezing state grants in nominal terms for three years and imposing by law that local authorities' operating expenses do not increase by more than 1% per year in nominal terms.
The Finance Minister wants the state to permanently manage unemployment insurance. What is your analysis of this announcement?
The real solution is to align by law the conditions for obtaining unemployment benefits with those of Northern countries. One must have worked for one year in the last 18 months to receive benefits, limit the benefits to 12 months for those under 50, 15 months for those under 60, and 18 months beyond, and require that unemployed people who have benefited from mandatory training take the corresponding job at the end of it.
On April 26th, rating agencies will once again deliver their verdicts on the credibility of the French signature. What is your forecast?
If the government takes inspiration from the proposals I just made, we will have nothing to fear. Unfortunately, it is likely that the government will be content with half-measures, that President Macron will increase public spending by 500 million or 1 billion euros with each speech, that local authorities will continue to create public jobs, etc. It will be necessary to hit the wall or put other responsible people at the head of the country who finally speak the truth, like the one I just proposed to you, for the country's situation to actually improve. Where are they? Because the wall is approaching.
