2023-12-13 19:00:27
After the parenthesis of “whatever it takes”, the debt once again becomes a subject of concern. While the overall debt, public and private, represented $226 trillion (around 209,500 billion euros) at the end of 2020, it now corresponds to more than 310,000 billion, or more than 350% of gross domestic product (GDP), an unprecedented level.
There are several serious reasons to be concerned. First, with the surge in interest rates decided by central banks, financial charges increase for all players, leading some to strangulation. For businesses, the default rate is skyrocketing, driven by the scarcity of credit and rising interest rates.
From the point of view of households, the ratio between their liabilities and their disposable income, which was 55% in 2003, increased to 102% in 2021 (in Great Britain, this ratio even reached 129%).
States are not spared: for France, the debt burden, which was less than 30 billion euros in 2021, represents 55 billion euros in 2023, and could reach or exceed 80, even 100 billion euros. euros, over the coming years.
Financialization of the economy
The State would thus devote almost a quarter of its annual budget to the sole repayment of interest on the debt. The situation is worse for developing countries: according to a United Nations report, 60% of the poorest countries are on the verge of or have already fallen into a debt crisis. These same countries have exhausted their fiscal space to continue financing their debt, which translates into a reduction in spending on social protection and other expenses, causing more than 165 million people to fall into poverty over the past year. of the last three years.
Second reason for concern, the speed of growth of debt far exceeds that of wealth production. This trend is not new, but it has become more pronounced in recent years. More and more debt is needed to support the same level of growth.
This results both from the financialization of the economy, the financial and real estate markets acting as “monetary black holes” which attract an increasing part of credit to the detriment of productive activities, as well as from the debt due to The Covid-19 epidemic, which led to going into debt to subsidize losses in order to maintain activity, but without really developing it. The absence of recovery plans worthy of the name in Europe (unlike in the United States) aggravates this situation.
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