Michaël Sadoun is a columnist and consultant
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Sovereignty!
This is the word that we thought was forbidden to mention since at least 1992, but which is once again shaking up French politics in 2024. While Gabriel Attal pronounced it 12 times during his general policy speech (including 11 for designate national sovereignty), this discourse misses an essential dimension: that of financial independence and therefore of our... sovereign debt.
France has been showing a certain levity in financial matters for a long time since this year we are celebrating the 50th anniversary of the French state's continuous budget deficit.
Half a century of deficits piling up to increase our debts.
An old reflex in the country which practically created the concept of “sovereign debt”, because it was once confused with the patrimony of the king – Louis XI was already in debt to buy religious relics and finance the seventh crusade of 1248.
France got into the habit of thinking that the sovereign could borrow at will to pay for the fast necessary for his power and distribute from time to time something to calm popular revolts.
This is how it is: in our French latitudes, the imperative of political power takes precedence over accounting concerns.
This has not changed: France prides itself today on living beyond its means to finance an inefficient State or a Social Security that most people envy.
Despite the establishment of the Republic (which has never defaulted on its creditors), our country retains the morals of an expensive monarch.
There is no question of asking him to tighten the screw, since any economy is synonymous with austerity and any supply-side policy is viewed with suspicion.
Also read: “The return to grace of sovereignty”
The result is that our public finances are now breaking historic records, since the French debt stands at almost 3,100 billion euros, around 115% of GDP.
A sum which makes it the third most indebted state in the European Union, after Greece and Italy.
As such figures may seem abstract, let us remember that France pays an ever-increasing interest charge each year: in 2022, it was 53 billion euros, compared to 38 the previous year – this increase being explained in particular by our loans indexed to inflation.
This staggering cost represents, for example, four times the budget of our justice system, the inefficiency and failure of which can be explained in particular by the lack of resources and the insufficient number of prison places.
All this must be said and repeated: a euro spent on the debt is a euro that lacks the effectiveness of the State.
It is a euro that repays the past instead of investing in the future.
Furthermore, the weight of our loans is not going to improve.
First, “debt rolling,” consisting of repaying old debts with new borrowing, naturally increases the average rate, because borrowing costs more than it did ten years ago.
The Italian case shows us that if sovereignty really interests us, it must also be financial.
Michael Sadoun
Then, the multiplication of loans indexed to inflation – 10% of the total outstanding amount of our sovereign debts – makes our country sensitive to price developments, which are still uncertain.
Finally, the weakening of growth that is looming this year further increases our debt ratio, which is dangerously close to that of Italy.
We have seen how Giorgia Meloni, far from weak campaign speeches, has been bound by budgetary orthodoxy and respect for Europe which allows her, through the strong currency that is the euro, to happily go into debt on the markets.
The Italian case shows us that if sovereignty really interests us, it must also be financial.
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Far from being a technocratic passion or the fad of our Protestant neighbors, good management of public finances is an instrument of power: a nation which indebted excessively to foreign investors is a nation which loses a fragment of its sovereignty, and is placed in the hands of financial markets or international agencies, whose ratings are increasingly scrutinized by our political leaders and commented on by our media.
General de Gaulle, so attached to national sovereignty, had for his part pursued an economic policy, focused on production and improving the trade balance, even managing to halve the debt ratio between the end from the 50s and 1969.
The various movements which are shaking France – “yellow vests”, Covid, Ukraine, inflation or even more recently farmers’ revolt – complete this beautiful slate, because they each time end in a budgetary sprinkling which seems to have become the only way to the State to contain popular demands.
But they must not lose the boring but important objective of making our debt sustainable.
Behind this new-found rigor we see a political virtue, consisting of returning to the bad habit which has made French politics a vast distribution of blank checks, sooner or later paid by the taxpayer.
Without systematic creation of subsidies, tax credits and various funds to meet popular expectations, the State will be required to concentrate on its real levers of action, if it still has any.
Less debt means more sovereignty!