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"The big loan is not enough to put France back on track"

August 7 category:Economy
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"The big loan is not enough to put France back on track"

Olivier Ferrand, president of the think tank close to the PS Terra Nova


This large loan of state is it necessary? Will it help to "put fuel in the economy," in the words of Nicolas Sarkozy?

Yes I Am. France suffers from two problems for public investment. First a cyclical problem of destruction of productive capital due to the economic crisis. It is therefore legitimate to set up a massive public investment outstanding feature to restore the productive capital. The second problem is that France is structural under-investment position for thirty years. This explains our economic decline, because we do not invest in sectors of the future.

Can increase the growth potential of France over the long term?

The big loan is a timely response in 2010. It addresses the problem of capital destruction. But this is not enough to put France back on track and allow it to regain its place in the forefront of developed economies. To do this would require that France spends annually one to two percentage points of GDP, or 20 to 40 billion euros in investment for the future. So we should invest the equivalent of a large loan each year in the next 30 years. The lesson is that we must now Flécher part of the annual state budget towards investments for the future.

The Socialist opposition denounces recourse to additional debt. Is that also your opinion?

The topic is: is that the current fiscal policy is the right one? To me it is not. The government must reconsider a number of public policies against-productive, such as the Tepa law (tax shield, tax exemption of overtime), representing a shortfall of 15 billion euros annually, or downward VAT in the restoration cost 3 billion euros per year. A five-year law Tepa equivalent to two large loans! But remove those measures do not suffice. We must make choices heavier fiscal policy. For example, the government spends about 30 billion euros each year to finance the burden of cuts on low wages. The question is whether we want to continue to fund unskilled jobs in an aging economy or whether this sum is to be used to create new skilled jobs.

The fields of investments announced by the Head of State Are the priorities of the economic future of France?

Yes I Am. The future economy will be both a knowledge economy and a green economy. On the one hand we must invest in higher education and research, the other in green growth.

According to Nicolas Sarkozy, the great loan will generate 60 billion euros of investment in total, or 25 billion euros of additional private investment. Is this realistic?

Hopefully. Public investment has a dual legitimacy substitute for private investment in unprofitable areas economically but socially, such as basic research, for example; create a ripple effect of private investment in profitable areas but in the long term, as the TGV in his time.


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