France’s public finances are under pressure as deficits persist, debt rises and higher interest rates gradually increase the cost of servicing it. Economists Jérôme Creel and Jonas Kaiser say the country must look beyond meeting European budget commitments, noting that financial markets have continued to push up the interest-rate gap between France and Germany.
In an opinion piece in Le Monde, the economists argue that debate over austerity should consider its economic and social consequences, not just the accounting. Cutting billions in spending or raising taxes can affect activity, they write, and the limited impact of previous increases in public deficits does not mean reducing them will be painless.
Creel and Kaiser also stress that deficits have different causes and effects. Some grow automatically when economic conditions worsen, as unemployment benefits rise and tax revenues fall. Others result from policy decisions, such as lowering corporate taxes or launching a stimulus plan to accelerate the ecological transition.
The timing and purpose of those decisions matter, they argue. A deficit may help stabilise the economy after a recession or support strategic sectors with future potential. But spending at the wrong time could add to inflation or sustain declining industries. The authors warn that indiscriminate austerity when economic activity is slowing and unemployment is rising could therefore prove particularly costly.
Sources: Le Monde Économie.