France is losing control of its public debt, according to expert François Ecalle

While France's ten-year borrowing rate rose Thursday morning to its highest level since 2002, François Ecalle made an unequivocal observation: France is in the process of "losing control of the public debt".

The latter, explained on Franceinfo this Thursday morning this recognized expert in public finances and former magistrate of the Court of Auditors, “is increasing faster than economic activity”, and this, without having the means to quickly reverse the trend.

A sign of investors' growing distrust of French debt, the yield on French bonds rose this Thursday morning to almost 4.90%, compared to 4.85% the day before at closing, a peak since July 2002.

Thus, the yield gap (the “spread”) between French government bonds and those of Germany continues to widen.

“What is very worrying is that, for several days, the spread has been continuously increasing,” warned François Ecalle, creator of the Fipeco information site. When it starts like that, you don’t know how far it can go.”

Canceling debt, “a dream”

The Bank of France, which holds around 18% of the public debt, could only “cancel this debt (as proposed by Jean-Luc Mélenchon, Editor’s note) if the other members of the euro zone agreed,” recalled François Ecalle.

“And today, there is no consensus, on the contrary,” continued the economist.

“Ultimately, it’s a dream,” he added, which rather contributes to raising the temperature on the markets.

Should France adopt a budgetary “golden rule” to reassure investors?

“It can be useful, provided you respect it,” decided the honorary senior advisor to the Court of Auditors.

Furthermore, such a system cannot be improvised: finding the “right formula” to make this golden rule “relevant” and “balanced” will require work and creativity, he judged.