2023-06-04 22:00:53
The French public debt and the ecological transition are two subjects that concern many citizens. The financial and environmental stakes are major and the balance between the two is delicate to find.
Concern over public debt
According to a recent Elabe poll for Les Echos and the Institut Montaigne, 71% of French people are worried regarding the level of public debt. More precisely, three out of four French people consider that it is urgent to reduce the debt. These concerns were reinforced by the downgrading of France’s rating by the rating agency Fitch at the end of April. Despite efforts to put this degradation into perspective by the executive, 70% of French people consider this event worrying.
Ecological transition: a major challenge
At the same time, France is facing another major challenge: the ecological transition. According to a recent report by the economist Jean Pisani-Ferry, France must do in ten years what it has struggled to accomplish in thirty years in terms of ecological efforts, Pisani-Ferry pleads for a specific tax on heritage of the wealthiest to finance the climate transition more equitably, but seven out of ten French people refuse that the country go into more debt to finance this transition.
Potential consequences of high public debt
Rising public debt has several potential consequences for a country’s economy:
- Increase in interest rates : High public debt can cause interest rates to rise to attract investors, which in turn can dampen private investment and slow economic growth.
- Limitation of fiscal and budgetary policies : High public debt can also limit the government’s ability to implement fiscal and fiscal policies to stimulate the economy in the event of a recession.
- Economic uncertainty : High public debt can create economic uncertainty, deterring investors from investing in the country’s economy.
Proposals for financing the ecological transition
Jean Pisani-Ferry’s report provides an interesting perspective on financing the ecological transition. It proposes a combination of public investment and an exceptional tax on the assets of the wealthiest to finance the ecological transition.
The transition to a greener economy will require an additional public investment of €34 billion per year by 2030, which represents a substantial increase on current levels. To finance these investments, Pisani-Ferry suggests setting up places an “exceptional and temporary tax” on the financial assets of the wealthiest 10% of French people, which might bring in 5 billion euros per year.
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