French debt reaches the highest in history
In the first quarter of next year, the French government debt will have exceeded the ceiling of 3 Trillion Euros, which is the highest in its history, reaching 113.7% of the gross domestic product.
With this unprecedented amount, the annual debt servicing cost (i.e. interest) will exceed 50 billion Euros for two main reasons:
First: The debt interest rate has increased globally, which automatically means an increase in the cost of servicing it.
Second: The French government continues to resort to debt to meet its needs.
In one year, France borrowed an additional 115 billion Euros.
Faced with these numbers, France’s position among the European Union countries is declining in terms of reducing the debt burden in terms of gross domestic product, as it occupied the penultimate third position, leaving only Italy and Greece behind.
The debt ratio of the first to the gross product reaches 144.6%, while the second jumps to 171.1%.
The available indicators don’t indicate an improvement in the French debt situation, given the budget approved for the year 2023.
Oversight bodies at home and abroad didn’t hesitate to criticize the government’s policies.
However, the latter explains the rise in value and debt service by the policy pursued by French President Emmanuel Macron to confront the consequences of Covid-19 and by the financial measures taken in recent months to reduce the cost of fuel for consumers and the aid that was provided to the most vulnerable segments to confront the wave of high prices and inflation that France hasn’t known, like other countries.
On Saturday, the French Central Bank expected that the country’s economic growth would slow significantly in 2023 against the background of the energy and inflation crises, but said that it would return to recovery in 2024 and 2025.
GDP growth will decline from 2.6% in 2022 to 0.3% next year, according to the central bank’s most likely scenario over the next three years.
A slowdown in France’s economic growth will be followed by a recovery of 1.2% in 2024.
Central Bank Director General Olivier Garnier said that this is less than the 1.8% previously expected, because the situation in the winter of 2023-2024 “may remain somewhat complicated due to the energy crisis”.
