Finance: 150 billion savings or guaranteed crisis for France!

France is facing an unprecedented financial impasse, with a public debt estimated at 110.6% of GDP and a deficit well beyond European criteria. Indeed, the time for half-measures seems to be over, and the Montaigne Institute, an influential Parisian think-tank, is sounding the alarm with its new report entitled “Public finances: the end of illusions”. This document proposes bold reforms with a view to saving nearly 150 billion euros by 2050.

Unsustainable debt: the point of no return

France is sinking into a deep budgetary crisis with a public deficit considered a time bomb, where the level of debt becomes a major obstacle to the management of national priorities. According to the Montaigne Institute, the public debt, which now stands at 110.6% of GDP, reflects a situation that is “unsustainable and incompatible with the financing of the country's current and future priorities”. In comparison, the euro zone average stands at 88.6%, a significant gap which illustrates the scale of the French problem.

“We absolutely must make a structural budgetary effort of more than 120 billion euros if we want to get things back on track,” declared François Ecalle, president of the Fipeco association and co-author of the report. These statements shed further light on the seriousness of the situation and the need to take immediate action.

The problem is not linked to simple debt management, but to the State's capacity to finance vital priorities such as ecological transition, education or even national defense. The report highlights a chronic problem with the efficiency of public spending, with a system for managing state funds that fails to deliver results commensurate with investments. Thus, the Montaigne Institute calls for a complete redefinition of the role of the welfare state to rationalize and make public spending more efficient, so as not to increase the debt further.

Controversial reforms for an uncertain future

To alleviate this critical situation, the Montaigne Institute is proposing drastic reforms in the field of economics, some of which are already subject to debate. Among the flagship proposals is the extension of the retirement age to 66 by 2050, a measure which alone could generate 30 billion euros in savings. At the same time, freezing retirement pensions for four years would make it possible to free up an additional 29 billion euros by 2029. These measures, although potentially saving on an economic level, risk encountering fierce opposition, particularly from the retirees, who form a solid electoral base in France. “These reforms are necessary, but their implementation will be politically costly,” warns Lisa Thomas-Darbois, director of French studies at the Institut Montaigne.

The health sector, one of the most expensive in the OECD, is also targeted by reforms aimed at optimizing spending. Streamlining generic drug prescriptions, reducing unnecessary hospital stays and better controlling daily allowances could lead to savings of around 28 billion euros. But, once again, these reforms are politically risky. Resistance from health professionals and pharmaceutical lobbies could delay or block their implementation. The coming weeks will be decisive in assessing the government's capacity to implement these reforms without further destabilizing the French social fabric.

The Montaigne Institute presents an ambitious recovery plan, but its implementation will be complicated. The proposed reforms, although essential to restore public finances, risk provoking strong opposition. Faced with divided public opinion and a National Assembly reluctant to support such unpopular measures, the executive will therefore have to demonstrate resilience and determination. In addition, we hope that tax rules related to cryptos in France will not enter into these reforms.