Report
Patrick Artus

What are the differences between France and the United States regarding the possibility of having a very large fiscal deficit?

The US fiscal deficit was 7.5% of GDP in fiscal year 2023 (after adjustment due to the cancellation of the student loan measure); France's fiscal deficit in 2023 was 5.5% of GDP. Is there a difference between the United States and France regarding the possibility of having a large fiscal deficit? A high fiscal deficit leads to the emergence of a high external deficit. This external deficit is offset by long-term capital inflows in the United States, but also in France. The risk of a balance of payments crisis due to the fiscal deficit is therefore low in both countries; The high fiscal deficit in the United States is due to support for investment in the energy transition and in semi-conductors, while France’s high fiscal deficit is due to spending to boost purchasing power and shore up weak growth; The US fiscal deficit cannot be compared with that of other countries, whereas it is natural for investors to compare France's fiscal deficit with that of other euro-zone countries.
Provider
Natixis
Natixis

Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.

 

Analysts
Patrick Artus

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