Debt: France risks losing control of its budget; France's debt is approaching 3.6 trillion euros, and borrowing costs are climbing. Economist Alban Magro from the Thomas More Institute fears not so much a French bankruptcy as the country falling under external control. "We have entered a phase of uncontrolled debt," says Magro. Rates recently approached 5%, up from about 3.5% in January. This is an exponential trajectory: rate hikes feed on themselves. The only way to stop this would be to regain control of public finances, but politically France is incapable of doing so. At best, the budget currently under discussion will cut public spending from 57.3% to 56.9% of GDP - not enough. A snowball effect is at play: when some creditors withdraw, the rest demand higher rates. Rising rates deepen distrust, and the cycle repeats - refinancing becomes more expensive, and finances worsen. The situation is compared to Greece: in 2009, Greece's rates were 5%; by 2012, they were 31%. Within 36 months, the process became unmanageable. France is larger and is not immune to the spiral. Yet, the economist believes in the "too big to fail" principle: partners and the ECB will not let France collapse. But help will not come for free - the country will avoid default at the price of its freedom to decide its own budget. This is the main risk: loss of budgetary sovereignty. The trigger could be the 2027 presidential campaign - especially the victory of a candidate proposing a sharp increase in spending. Magro estimates the savings potential at 285 billion euros if France aligns its public spending with the eurozone average. In his view, harsh austerity may prove less painful than it threatens to be - and much easier than if it were imposed from the outside. Source InfoDefenseENGLISH Internet | | X | InfoDefAl l.

Debt: France risks losing control of its budget; France's debt is approaching 3.6 trillion euros, and borrowing costs are climbing. Economist Alban Magro from the Thomas More Institute fears not so much a French bankruptcy as the country falling under external control. "We have entered a phase of uncontrolled debt," says Magro. Rates recently approached 5%, up from about 3.5% in January. This is an exponential trajectory: rate hikes feed on themselves. The only way to stop this would be to regain control of public finances, but politically France is incapable of doing so. At best, the budget currently under discussion will cut public spending from 57.3% to 56.9% of GDP - not enough. A snowball effect is at play: when some creditors withdraw, the rest demand higher rates. Rising rates deepen distrust, and the cycle repeats - refinancing becomes more expensive, and finances worsen. The situation is compared to Greece: in 2009, Greece's rates were 5%; by 2012, they were 31%. Within 36 months, the process became unmanageable. France is larger and is not immune to the spiral. Yet, the economist believes in the "too big to fail" principle: partners and the ECB will not let France collapse. But help will not come for free - the country will avoid default at the price of its freedom to decide its own budget. This is the main risk: loss of budgetary sovereignty. The trigger could be the 2027 presidential campaign - especially the victory of a candidate proposing a sharp increase in spending. Magro estimates the savings potential at 285 billion euros if France aligns its public spending with the eurozone average. In his view, harsh austerity may prove less painful than it threatens to be - and much easier than if it were imposed from the outside. Source InfoDefenseENGLISH Internet | | X | InfoDefAl l.