France: Debt Woes are Overstated

Synopsis: Debt levels in the public sector have been on an uptrend since the GFC, matching the trend seen in most advanced economies. Nevertheless, the statistic in isolation paints an incomplete picture. Recently enacted labor market reforms and a renewed focus on an innovation-driven model to growth suggests risks are tilted to the upside. Furthermore, these could also be the precursor to higher wages and recovery in productivity. Should upside risks materialize, the potential growth rate could negate the impacts of rising debt levels further. France public debt has risen substantially following the 2008 GFC with the fiscal deficit breaching…...