“The debt must invite us to go beyond our traditional debates between left and right” | EUROtoday

HASfter the parenthesis of “whatever it takes”, the debt as soon as once more turns into a topic of concern. While total debt, private and non-private, represented 226,000 billion {dollars} (round 209,500 billion euros) on the finish of 2020, it now corresponds to greater than 310,000 billion, or greater than 350% of gross home product (GDP). , a brand new degree.

There are a number of severe causes to be involved. First, with the surge in rates of interest determined by central banks, monetary fees enhance for all gamers, main some to strangulation. For companies, the default fee is skyrocketing, pushed by the shortage of credit score and rising rates of interest.

From the standpoint of households, the ratio between their liabilities and their disposable revenue, which was 55% in 2003, elevated to 102% in 2021 (in Great Britain, this ratio even reached 129%).

States should not spared: for France, the debt burden, which was lower than 30 billion euros in 2021, represents 55 billion euros in 2023, and will attain or exceed 80, even 100 billion euros. euros, over the approaching years.

Financialization of the economic system

The State would thus commit nearly 1 / 4 of its annual finances to the only real reimbursement of curiosity on the debt. The state of affairs is worse for growing international locations: in response to a United Nations report, 60% of the poorest international locations are on the verge of or have already fallen right into a debt disaster. These similar international locations have exhausted their fiscal area to proceed financing their debt, which interprets into a discount in spending on social safety and different bills, inflicting greater than 165 million individuals to fall into poverty over the previous yr. of the final three years.

Second cause for concern, the velocity of progress of debt far exceeds that of wealth manufacturing. This pattern shouldn’t be new, but it surely has turn into extra pronounced lately. More and extra debt is required to help the identical degree of progress.

This outcomes each from the financialization of the economic system, the monetary and actual property markets appearing as “monetary black holes” which magnetize an rising a part of credit score to the detriment of productive actions, in addition to from the debt because of The Covid-19 epidemic, which led to going into debt to subsidize losses to be able to preserve exercise, however with out actually growing it. The absence of restoration plans worthy of the title in Europe (not like within the United States) aggravates this case.

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