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“Bell” Trichet on France’s fiscal situation

The alarm bell regarding its financial situation of France says the French former president of the European Central Bank Jean Claude Trichet.

In an interview with the French magazine Le Point, Trichet underlines the continuous deterioration of the state of French public finances over 15 yearsrecalling that in 2007, the France and Germany had identical public debt which represented 64% of their GDP, while today France’s is equivalent to 112% of its GDP and Germany’s is around 66%. “The problem is neither Fitch nor Covidnor the energy crisis, but a long-term French fiscal laxity”, says Trichet characteristically, underlining that France is currently the bad student of the eurozone, it is over-indebted and does not realize it.

“Ten years ago, we were borrowing on the same terms as Germany was borrowing. Today we are between Germany and Spain in terms of interest rates,” emphasizes Trichet, underlining that unlike Italy, Greece, Ireland, Portugal or Spainhit by the crisis of the previous decade and coming to their senses, France does not seem to understand what it means to be vulnerable.

Continuing, Trichet states the following: “I have always supported fiscal prudence because it is an important element of the country’s credibility in Europe and in the world. Faced with a global crisis like Covid, it goes without saying that fiscal measures had to be taken to avoid collapse and a gigantic social crisis. The extra expenses were necessary. But the slogan ‘whatever the cost’ was probably wrong in the case of France, given its unbridled propensity to increase spending.”

Regarding the pension reform in France, Trichet states that there were no 36 solutions to ensure the funding of pensions and that raising the retirement age was the appropriate solution. He also adds: “I don’t make a political comment, but what I hold back is that the government remained firm, although it was confronted with a large part of public opinion, from the extreme right to the extreme left. The government showed courage. For our credibility as a nation, it would be tragic to give up. Neither our partners nor the global creditors who finance us would have understood a setback.”

According to APE, a final interview about the increase in defense spending due to the war in Ukraine, among other things, points out that “we must constantly question their effectiveness because they burden the general costs of the country compared to its competitors. Moreover, the necessary increase in military spending should not be an excuse for less fiscal prudence. European countries must make compromises and clarify their priorities in order to free up resources to protect themselves.”

Source: News Beast

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