In France, we could think that the increase of public debt is a general consequence of the Covid-19 crisis. However, the chart we are commenting here shows that it is not. It reminds us that the public debt ratios, measured on the right scale and represented by small black squares, are very different from one country to another, including within a European Union where each member state is supposed to converge to the single norm of 60% of the GDP.
Here, we choose to cut the axis to 90% of the GDP, which is the level beyond which, in the new European Stability Pact, governments must obtain, or at least aspire to, a faster drop in their debt ratios.
The countries above this line are those of Southern Europe, Italy, Greece, Spain, Portugal, as well as Belgium and France. It should be noted that the United Kingdom and the United States also display large debts, much higher than 100% of the GDP, but which are not subject to the same rules.
This does not mean, however, that they are free of any constraint, but we will come back to this. Let's focus on the dynamics of the debts, whose progression is measured in GDP on the left scale of our graph. What is striking is how different the trajectories are.
Four years after the Covid-19 crisis, some countries have been able to reduce their debt ratios or have very little increased, while others find themselves with substantially heavier financial passives.
The states of Southern Europe stand out again, in a positive way this time, by the fact that their public finances have resisted well against the subsequent Covid-19 shocks and the war in Ukraine. We can of course highlight the fact that the few 800 billion euros of the Next Generation EU recovery plan will have largely benefited them.
But that does not explain everything. These countries are also reaping the fruit of years of effort dedicated to rebalancing their accounts. In 2024, Italy, Greece and Portugal are among the few in Europe to display primary budget deficits, i.e. before interest payments.
Spain, for its part, is very close to the equilibrium. Symmetrically and without real surprise, the countries whose debts have increased the most are also those whose budgetary imbalances have persisted well beyond the health crisis.
The most emblematic case is that of the United States. Their economic growth, close to 2.5% per year on average for five years, has been twice as fast as that of the European Union, but it has also fed itself with significant deficits. The result is a debt that has become considerably heavier, of 17 points of GDP compared to its pre-pandemic level.
The United States, however, has the privilege of being able to issue in the main international reserve currency, which is the dollar, which gives them more latitude than others in terms of debt. The exercise, however, is not without limits, as illustrated by the recent episode of rising interest rates or, for a few years, the growing tensions surrounding the repayment of the debt ceiling at the US Congress.
Let's look at where France is. At 113% of GDP, its debt generates an interest rate that remains in the European average, 4.2% of the total revenues, and weighs less than in Italy, Spain or Portugal.
There is therefore no problem of sustainability, and the French signature remains of good quality. The concern is rather on the side of the austere trajectory, linked to significant deficits that have persisted until 2024. The Finance Act for 2025 will have the mission to start a correction.
Its final version remains to be seen, however. What is certain, however, is that the control of public debt that is imposed on it will not be dissolved.
