What if France did not need to reduce its fiscal deficit?

France’s fiscal deficit in 2023 was 5.5% of GDP, well above previous forecasts. There is a consensus that this fiscal deficit must be reduced (through government spending cuts or tax increases). But is it certain that this deficit actually needs to be reduced? What are the arguments defending the idea that this deficit is acceptable? There is no serious sign of a decline in demand for French government bonds; The supply of German government bonds and its fiscal deficit are steadily declining as a result of fiscal austerity in Germany. If German and French government bonds are highly substitutable, it is the sustainability of these two countries’ public debt as a whole that must be analysed by looking at the primary fiscal deficit of France and Germany as a whole. We then see that the sustainability of France’s and Germany’s public debt as a whole would be ensured from 2024 ; Not reducing France’s fiscal deficit will make it possible to maintain a high level of public investment in the energy transition, public spending on research, education and support for reshoring, thereby increasing productivity gains, growth and tax revenues in the medium term.