Repayment of Kovid debt: Economists divided over the strategy adopted by France

We have not finished hearing about the public debt of European countries, starting with France. According to a recent study by credit insurer Euler Hermes, “a return to the level of public debt compared to GDP before the crisis is clearly not possible” for France, but also for its Iberian and Transalpine neighbors. , Worse still, according to the same study, it would be necessary It took 89 years for Spain to reclaim pre-crisis public debt, 67 years for France, 26 years for Italy, which was able to generate a primary surplus, and “only” seven for Germany. year.

Economic disparities between EU member states have undoubtedly never been so significant. While euro area public debt has risen to 17 points or two trillion euros of GDP, in France, the increase in debt is around 20 points of GDP, while in Italy and Spain it has climbed by 25 points. Of GDP. Germany has increased its debt by only 15 points of GDP. Regarding debt ratios, seven EU countries reach or exceed 120% of GDP, while eight other countries have half the level of public debt.

An unprecedented asymmetry in the face of the economic crisis arising due to the epidemic, which the experts in question do not explain at all in the same way.

“A permanent Frenchman who spends anything”

“Many countries, such as Germany, are doing better than France. We exceeded 60% of public debt in relation to GDP in the early 2000s, just before the crisis to almost 100%. So it is quite logical that We are now lagging behind ”, analyzes Agnes Verdier-Mollini.

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For the director of the Efrap Foundation, “France has not made the necessary reforms such as pensions to reduce debt at the same time, the countries of Northern Europe, known as” frugal “, at the same time. The task of drastically reducing public spending and introducing effective decentralization ”.

“According to the OECD, we spend 84 billion euros in public spending compared to others. That’s 84 billion euros a lot! A few years ago, we were” only at “60 billion”, she says, of a permanent Frenchman. Blasphemy, no matter what it costs.

“We must allow development to come back first”

An opinion that economist Matthew Plain does not share at all. “The findings of this study are purely theoretical, as they are based on post-crisis assumptions about which nothing is known, particularly on the development trajectory. In relation to Germany, France and other EU countries This distinction with is quite logical. Germany had a lower deficit level than ours, and despite the setbacks, they faced a crisis with budget surpluses. In fact, this is not comparable, Germany has long been in Europe and even That there has been an exception in the world ”.

For OFCE economists, “Above all, we should not put the car in front of the horse and make those same mistakes again at the end of the subprime crisis.”

Matthew Plain actually advises growth to return before Kovid envisions a budgetary adjustment to return to public debt levels. “After the subprime crisis, we have a double recession and the implementation of an austerity policy with an increase in taxes and a decrease in public assistance. We really should not repeat the same mistakes. Prioritizing fiscal adjustment has proven to be ineffective. We have incentives. Plans should be prioritized and we can talk about fiscal adjustment when the economy is stronger.

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“We have shut down the economy too much in relation to our neighbors”

An analysis light years away from what Agnes Verdier-Mollini envisioned to support France in such a way from the crisis.

“When you are in such a big crisis, it is completely normal to be in deficit. But the question is, how far do we go? During the first lockdown last year we shut down the economy too much. In order not to bring the country to a complete deadlock, we could also have kept much less strict imprisonment in areas such as Brittany or New Aquitaine, much less affected by the virus than in the rest of France… the Germans, they meanwhile Factories and utilities continued to operate. La Poste continued to operate in Germany, and in Sweden, even Tobaconists can function as post offices today ”.

Agnes Verdier-Molini goes even further. He said, ‘We have to get out of this rut ​​of public spending. Should we put people in public service for a lifetime? Should single capped allocation be implemented? I think these are questions that we can ask the French by referendum. When we see that we have more elected officials in the लेle de France than in the whole of the United Kingdom, this is no longer possible…, “she says.

Before adding: “We must reform, retire much later with our European neighbors, decentralize and digitize France without delay. France is sinking into debt to work and not to invest in the future.” For. Paying teachers is a task, not an investment. We have to define what is good and bad debt. Communities do not have the right to drown in operational debt but only in investment. We just have to do that everywhere is.”

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“The United States Has More Than Us”

Proposals that Matthew Plain does not follow. “Whatever its cost, all countries have it. America has done more than us. Public aid in France represents 8 points of GDP in three years and in the United States it is 23 points. We targeted “whatever we spent”, they sent checks there and the household income had never risen so much in 20 or 30 years.

For OFCE economists, “Since debt is very cheap and rates are currently very low, it is not possible to apply the same rules as before. No hassle, yes, but no immediate debt reduction. It is quite disastrous for the economy And it may worsen the crisis, especially for the population, who will then have to pay more taxes and there will be a significant reduction in state aid.

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