Abstract
Using descriptive evidence, this paper contributes to the debate on French public finances? consolidation by examining the long-term sustainability of France?s fiscal position. We trace the historical trends of government?s tax receipts and expenditures. We illustrate that while the level of public expenditure in France is larger than in the Euro Area, its trend is comparable to its neighbours. French net debt is comparable to Eurozone?s while French net wealth remains positive. However, the French tax system is not progressive with only 6% of compulsory levies raised that way, and too complex. The paper then acknowledges the efficient debt management of French authorities. As a conclusion, we see no risk of future unsustainability linked to the nature or the level of current French public finances.
Highlights
We look at the structure of the French public debt
The conclusion is that there is no serious reason to worry about sustainability, even if French public finances can certainly be improved in terms of fairness and efficiency
We looked at the structure of public debt
Summary
If we take a long view, as, we can observe that France on average since the 1980s has never run deficits substantially larger than the average of other OECD countries. Quite naturally, this translates into an accumulated stock of debt that is not significantly different from other countries. Government expenditure in France is over 12 percentage points higher than the average of OECD countries, and 5 points larger than the second largest spender, Italy. For the ratio of government consumption spending to GDP, France stands well above the OECD average, even if the difference is not as large as for total expenditure
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