Report
What to make of the sharp rise in debt ratios in France?
A comparison between France and other OECD countries since the crisis shows that France is an outlier insofar as its total debt ratio has risen rapidly , due to sharp rises in both the public debt ratio and the private debt ratio. The rise in public debt in France is therefore not a reaction to a fall in private sector debt , since both forms of debt have increased. What accounts for this anomaly in France? With regard to companies, the fact that they have maintained a high level of investment and, above all, financed acquisitions and growing cash holdings, which may be a concern; With regard to households, the fact that low interest rates have encouraged them to buy housing and durable goods; With regard to the government, the fact that it has not conducted a countercyclical fiscal policy despite the recovery in activity on the back of growing private sector debt. T he government ’s behaviour is open to criticism: it should not increase its debt if the private sector increases its debt.
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Natixis
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Patrick Artus
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