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“The idea that we can cancel the debt is false and dangerous”

For LR chairman of the National Assembly’s finance committee, who was budget minister during the 2008-2009 crisis, the debt must be repaid. He opposes the arguments of part of his political family, and pleads for new European budgetary rules.

The health crisis has caused the French public debt to explode. In a world of low or even negative interest rates, is this really a problem?

We could not do otherwise, since we did not have enough money to finance the measures to support and revive the economy. This is the point, moreover: we approached the crisis with debt among the highest in OECD countries. Can it last? No.

I agree that expressing debt as a percentage of gross domestic product (GDP) no longer makes much sense: 120% debt is important but what matters is the interest charge, which has fallen sharply. Today, it is bearable. But is it sustainable? Probably not. France’s financial sovereignty is at stake: certain countries have been placed under supervision for not having been able to repay their debt. The debt comes from a chronic annual deficit installed long before the Covid crisis. We must prepare for the next crises, which may be more powerful than this one.

Do you not subscribe to the idea, which is increasingly widespread, including within your party, of debt cancellation?

Beware of simplistic opinions. For me, the idea that you can write off the debt is wrong and even dangerous. A debt can be repaid. Countries that default have paid a gigantic price: savers have been ruined, pensions are no longer being paid. And then, would you imagine deciding to cancel your mortgage repayment?

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But a State is not a household, it can refinance itself on the markets …

It is correct, a debt “rolls up”, that is to say that the State borrows regularly to repay it. But the debt is not virtual, it belongs to someone. In this case, we have an appointment with the markets and those who lend us, and this is based on trust. As for the European Central Bank (ECB), which also holds part of our debt, it is the guarantor of inflation and of our currency. If we downgrade the ECB’s balance sheet, it will weigh on the French: it is the credibility of the euro that is threatened and investors will turn to the dollar, the renminbi or private currencies… This is not reassuring!

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