France's public debt amounts to 119% of its GDP and will reach 122% by 2027, with a deficit exceeding 5%. Interest payments consume a significant part of the budget.
According to El Periódico, France's public debt is equivalent to 119% of its gross domestic product (GDP) and could rise to 122% by 2027. The deficit exceeds 5% and interest payments take up a substantial portion of the budget. Additionally, markets are demanding higher returns to lend money to the country.
The analysis compares debt to a mortgage: if debt grows more slowly than nominal economic growth, it weighs less each year, and if it grows faster, it weighs more. According to the article, France is spending more than it earns, causing the debt to increase on its own. The next major political challenge comes with the April elections.
In this context, Alberto Núñez Feijóo, leader of the PP, has argued that pensions are "non-negotiable" and has promised to update them according to the CPI. Regarding how to finance this proposal while also lowering taxes, the article notes that it does not provide a clear explanation.
Spain is also mentioned as an example. Its debt decreased from around 120% of GDP in 2020 to about 100%, largely due to inflation and economic recovery, which raised nominal GDP and reduced the weight of the debt, while savers lost purchasing power.
The European Central Bank (ECB) has raised interest rates to 2.50% and has reduced its bond portfolio. Its president, Christine Lagarde, has stated regarding the Transmission Protection Instrument (TPI):
"We would prefer not to use it, but if we have to, we won't hesitate; believe me, we won't hesitate."
The TPI allows for the purchase of public debt when financial fragmentation drives up risk premiums. According to the information, the ECB would intervene if it believes that the rise is due to speculation rather than the country's economic fundamentals.
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