Since the beginning of the month, two important figures relating to the French economy have been published: the latest estimate of the public deficit for the year 2025 and the balance of foreign trade in goods for the first half of the year. Neither of them was a pleasant surprise. With a rate of 5.4% in relation to GDP, an increase compared to 2024, the government is forced to adopt a finance law for 2026 including an effort to reduce the significant deficit, in excess of 40 billion euros, but it does not yet have a majority in the National Assembly likely to approve the measures mentioned. Foreign trade experienced a deficit of 43 billion over the first six months of the year, stable compared to the last two semesters but up sharply compared to the period before the health crisis and Russia's invasion of Ukraine, when it averaged only 30 billion.

The analyses and comments on these results are instructive. The situation of public finances is the subject of alarming statements, even going so far as to evoke the intervention of the IMF, which is absurd. France no longer has control of its currency since the country belongs to the euro zone and its banks do not represent a threat since they have presented record profits. In addition, inflation is low, artificially increasing the debt-to-GDP ratio and the interest rate differential with Germany has fallen below 70 basis points, a sign of market confidence, until the day when the Prime minister announced he will request the support of the national Assembly. The excesses of the rhetoric are probably intended to make unpopular measures accepted, but they risk increasing political instability at a very ill-chosen time.

Conversely, the country's inability to recover its foreign trade only gives rise to technical analyses and descriptive comments without getting to the bottom of the problem, except to claim that it is the cost of labour and the laziness of the French that are at the origin of these poor results. Already, in the early 2000s, when the deterioration in foreign trade began, we tried to blame the euro. This explanation was quickly abandoned in the face of the large surpluses accumulated each year by Italy, but not the principle adopted by any government according to which when something went wrong, it was necessarily the fault of others.

The contrast between the judgments made on the two "holes" of the French economy, public deficits and that of foreign trade, is therefore striking. But it masks a deep reality. Since 2013, the adoption of measures to improve the competitiveness of companies has been at the centre of the economic policy of successive governments. These measures consisted of reducing the burden on labour costs and reducing corporate taxation. It is these measures that have generated growing deficits and the soaring public debt (we are talking about 70 billion per year on average) without any result on competitiveness, as evidenced by the foreign trade figures. On the other hand, dividends paid and share buybacks by CAC 40 companies and banks reached a record in the 1st half of 2025.

We are therefore alarmed about the current situation but we pretend to ignore the fact that it is the result of past decisions that have not had the expected result and which are at the origin of a worrying financial imbalance that is very difficult to resolve. It all came from a major economic error, amplified by inappropriate and costly measures. This is not the first time. In the 1970s, for example, it was believed that it was government price controls that would defeat inflation. At the end of the 1980s, it was close to 15%. The policy of gradual liberalization of prices from 1984 onwards made it possible, thanks to the play of competition, to absorb what was a "French evil" and to make decisive progress in the construction of Europe.

The same is true of the cost of labour as an explanatory factor for the external deficit and the deindustrialisation movement observed over the past 20 years. How can it be the cause when there are such disparities between the different industrial sectors? Aeronautics, shipbuilding, luxury goods and cosmetics are experiencing structural surpluses while automotive, chemicals, paper and textiles are in growing deficit. The case of the automotive sector, which has contributed one of the highest to the deterioration in foreign trade, is revealing. When Peugeot and especially Renault relocated, Toyota greatly increased its production in France. Yet these three groups were subject to the same charges.

This policy has been costly for public finances because it was not focused on sectors subject to international competition. It benefited the retail sector, the banking sector and service activities. It also included an absurd measure that concentrated the reductions on low wages. However, industrial success is based on the skills and qualifications of employees and therefore on an above-average level of pay.

The vast majority of the new resources from which companies benefited were therefore not the result of their ability to find new customers and to offer them the goods corresponding to their expectations, but of cost reductions made at the expense of the State and the social protection system. This has enabled them and continues to improve the remuneration of managers and shareholders. However, there has been no significant recovery in domestic investment that would have generated an increase in production capacity and employment, thus contributing to the recovery of the external accounts. 

On the contrary, we have witnessed a wave of acquisitions abroad made easier by these reductions, which have often proved disastrous and which have caused the disappearance or their passage under foreign control of industrial jewels, such as Alcatel, which had seen fit to acquire Lucent in the United States, or Lafarge, which had bought a group of cement plants in the Middle East on the eve of the outbreak of wars throughout the region. To overcome the consequences of this decision, the group was forced to come under the control of its Swiss competitor Holcim.

The discourse in favour of reindustrialisation and programmes such as "Choose France" to attract foreign investors or "France 2030", to encourage the emergence of companies using new technologies, have not succeeded in reversing the past trend. The absence of a lucid analysis of the real causes of the trade deficit does not allow us to reflect on the appropriate measures that should be implemented to remedy the two holes, that of public finances and that of foreign trade.

France cannot remain in denial forever and its leaders will not be able to ignore the link between these two deficits. This awareness is necessary to define a new economic policy. A first measure is necessary: the reduction of general reductions in charges, but accompanied by an increase in the wage ceiling so that qualified jobs in industry can benefit from them.

When a policy does not produce the expected results, it must be admitted, the reasons for this failure must be identified and new proposals must be put forward. Communication cannot be an indefinite substitute for action. The next elections will be an opportunity to open this debate, which is essential to the recovery of the French economy.