France’s public debt remains uncomfortably high at close to €3 trillion, according to data published on Tuesday by the National Institute of Statistics and Economic Studies (INSEE).
Government debt stood at €2.95 trillion at the end of last year, and despite the country’s debt-to-GDP ratio dipping slightly last year compared to 2021, it remains at a historically high level of 111.6 percent. For context, public debt as a percentage of the country’s gross domestic product was well under 100 percent in the years preceding Emmanuel Macron’s presidency.
However, a slight decline in public spending and a rise in tax revenue last year kept the debt in line with the French government’s long-term deficit reduction targets.
The government’s budget deficit last year declined to 4.7 percent of GDP compared to 6.5 percent in 2021, now under the government’s target of 5 percent, while public spending fell from 59.1 percent in 2021 to 58.1 percent last year.
Revenues increased from 52.6 percent in 2021 to 53.4 percent last year, while taxes also rose from 44.3 percent to 45.3 percent.
“INSEE’s figures for 2022 confirm that French growth is holding up well, so is our tax revenue, particularly the corporate income tax,” said French Economy Minister Bruno Le Maire on Tuesday. “Our strategy remains the same: Improve France’s growth to reduce debt and control spending,” he added.
While vast public spending was considered a necessity through the Covid-19 pandemic, France’s national debt is well above its European rivals, and the country continues to rank as one of the biggest debtors in the developed world. In contrast, the U.K.’s public debt-to-GDP ratio was 99.2 percent at the end of February 2023, while Germany’s public debt accounted for 66.4 percent of the country’s GDP, last reported in September 2022.
One major problem that lies ahead for the French government in its attempts to reduce debt is that the French public doesn’t really care. “In our November 2022 barometer, reducing public debt came at the bottom of priorities of those surveyed, only ahead of the fight against Covid-19 and the European Union,” Frédéric Dabi, a director general at the polling institute IFOP, revealed to Le Monde newspaper.
The French people believe the country can “live with the debt” and appear to object vociferously to any major government initiatives to reduce the country’s debt burden, as can be seen in the public response to Macron’s controversial pension reforms.
“The macroeconomic argument did not work this time to justify the pension reform, whereas it was very present when the (retirement) age was raised to 62 in 2010,” Dabi added.
Despite the government’s plummeting popularity, it remains defiant in its attempts to push through government policy to bring the country’s finances back under control.
“We reaffirm our targets, namely for the deficit to stand at 3 percent in 2027 and an ongoing reduction in public debt,” Le Maire tweeted on Tuesday.
“The finance bill for 2024 should mark our ambitions in this area,” he added, suggesting that this month’s revolt over the country’s pension reforms could be just the beginning.