The announcement by the rating agency Moody's that France AA will be maintained with a negative outlook is a refutation of the catastrophist discourse widely spread in the political world and in the media. AA is one of the best ratings in the euro area, but the negative outlook is justified by the lack of clarification on the 2026 and 2027 budgets, with the risk of a return to the same political instability that followed the dissolution of the National Assembly in 2024. It is this instability and not the situation of public finances that was at the origin of the downgrades made by the two other rating agencies, Fitch and Standard & Poor's, in 2025, when they downgraded France's rating to A.
To justify their harsh judgment, commentators often made comparisons with Italy, long presented as the bad student of the European Union. Its 10-year interest rate, despite a much higher debt ratio, would have been in line with that of French government bonds. However, the Italian rate has risen again and is 15 basis points higher than that of the French OAT. As for the gap with Germany, which had exceeded 80 basis points in 2024, it has fallen back below 65 points.
The publication of Moody's diagnosis has not been the subject of any comment because it weakens the constant strategy of political leaders to reduce deficits, consisting of making unpopular measures accepted while frightening the populations concerned. However, this fear is for the moment unjustified, as the Agency pointed out, which had been reinforced by the latest estimate of the public accounts for the year 2025, the deficit having finally been lower than announced with 5.1% of GDP compared to 5.4% calculated at the end of last year. This is also a common practice, especially for Social Security accounts. In the autumn, a very cautious forecast is posted, which is reestimated in March in the right direction.
France's public debt is very high, but this does not pose an immediate threat. Moreover, in relation to GDP, it is much lower than what is observed in Japan, the United States, the United Kingdom and Italy, to mention only the economies of the main developed countries. The financial markets have understood this and France has no trouble financing its deficit and refinancing loans that have reached maturity. Each issue is often oversubscribed three times.
Two factors explain this confidence. The first stems from the strong financial savings of households, which have increased further in recent years to exceed €6100 billion net of debt at the beginning of 2026. The relationship between this and public debt has changed little in recent decades. It is a much more relevant indicator than the relationship with GDP since it compares assets and not a flow with a liability. The French therefore have the resources to meet the repayment of the public debt. The comparison with Germany in this area is not relevant because of the differences between pension systems. In capitalization, contributions are included in the calculation of savings, which is not the case in pay-as-you-go plans.
The second factor lies in France's external position, which, despite its heavy trade deficit, has a current account surplus, which is admittedly lower than that of its European partners. But when we know that a large part of the external public debt is held by the European Central Bank, we cannot fear a financial crisis affecting the euro resulting from excessive indebtedness by France.
Finally, the argument that this debt is being transferred to future generations makes no sense since they will inherit, and much more, the money to repay it if necessary. In addition, they will benefit from the considerable investments financed by public debt in recent decades. Among others, we can mention the TGV network, the nuclear fleet, the Channel Tunnel and one of the most efficient communication networks in the world, production tools and infrastructures that did not exist in 1980.
These reassuring elements should not, however, obscure the fact that the public debt burden will increase much more because the euro area is experiencing a rise in interest rates after a long period of very low or even zero interest rates than because of the evolution of its debt. France is not at the origin of the ECB's rate hikes since its inflation is one of the lowest in the zone and these will not fall due to the inflationary context generated by the war in the Middle East.
The challenge facing France is therefore not that of its solvency but that of the use of public funds. It is not a question of increasing levies, even if the distribution of these can and must be adapted to the real situation of taxpayers, but of carrying out an in-depth reform of public institutions and reducing their operating expenditure year after year. It also applies to public services, the costs of which are constantly increasing, while their quality, which is much higher than what is observed elsewhere in the world, continues to weaken and provoke discontent among citizens. France's indebtedness is the result of poor administrative management practices rather than an excess of transfers to households or businesses.
The next presidential election must therefore be an opportunity to open a debate on institutional reforms and the change in these practices in order to achieve a gradual but significant reduction in public deficits. It is imperative to reduce the number of bodies responsible for drafting reports to guide public action. What is the purpose of the Economic, Social and Environmental Council and its regional bodies today? The Court of Auditors has a budget of 200 million euros, whereas its primary mission has been largely reduced by the creation of the Regional Audit Chambers.
The method consisting, each time a new action is initiated, in the creation of a body, Council, High Council, Observatory, Commission, Authority, etc. must be abandoned and a major clean-up must be carried out to reduce the number and size of these institutions. Significant and sustainable savings on staff and real estate costs can be achieved. Thus, and without spectacular announcements, the next governments would reduce operating expenditure without, on the contrary, undermining the quality of public services.
This new method of public action would have another far from negligible advantage: it would contribute to the debureaucratization of the country. It is the multiplication of public institutions and the increase in their capacity to produce texts that has led to the drafting of regulations of all kinds. They affect the lives of households by weighing on their purchasing power and that of companies by reducing their productivity with the recruitment of teams responsible for understanding these new rules, which, moreover, change regularly.
It is therefore possible to reduce public deficits, curb the rise in debt and improve the lives of the French people and the competitiveness of our companies. It is up to those who will lead the State to understand this and take the appropriate decisions. By having them adopted by the national and local institutions whose mission it is, they will be able to avoid making unnecessary announcements.