Fifty years of deficit budgets: a French dizziness


All the last governments managed at best to stabilize the deficit, which they then let slip away. via REUTERS / POOL / Lionel Urman/Sipa USA via Reuter / Lionel Urman / Serge Tenani / Hans Lucas via Re / Serge Tenani

DECRYPTION – The same scenario faithfully reproduces itself from decade to decade, but the situation worsens with each crisis.

For his first wishes as president, Valéry Giscard d’Estaing attempts to repeat the exercise with a surprising “So farewell to 1974, and hello to you, 1975“. He does not suspect then that this year which he welcomes with this solemn good-nature will have many inconveniences in store for him. In 1975, France suffered the full brunt of the oil shock. The price of a barrel increased fourfold between October 1973 and March 1974, and the economic situation took a sudden turn. Growth, forecast at 4.3% in the initial budget, collapses to -1%

The president lets his Prime Minister Jacques Chirac try to revive the economy with a recovery plan. The State spends at all costs to support consumption, stimulate business investment, finance programs to modernize public facilities… Checks pile up and the budget deficit that year comes close to 2% of gross domestic product (GDP), despite a significant increase in taxes.

French singularity

Giscard reacts, by calling…

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