As the ratings given by the rating agencies Moody’s and Fitch on French sovereign debt approach, this Friday, April 26, numerous scenarios are being considered to reduce public debt. Announced by the National Institute of Statistics (INSEE), the state deficit amounts to 154 billion euros, or 5.5% of GDP in 2023, far from the 4.9% on which tabled the government.

20 billion euros in savings in 2024

Faced with this 0.6% increase in debt, the government is looking for solutions to resume growth. In February, the State revised the expected growth in 2024 downward from 1.4% to 1%. In order to be able to respect the forecast trajectory for 2024, with a forecast deficit of 5.1%, the government must now find 10 billion euros, in addition to the 10 billion already frozen last February. In total, the State will have to save 20 billion euros to stay within the set objective.

In the columns of Le Monde, a group of five economists proposes to “contribute” retirees to achieve the forecast deficit set for 2024.

“We propose to make greater contributions to retirees, for reasons of economic efficiency and social justice. Let us remember that current retirees have been the main beneficiaries of the public debt contracted over the last fifty years, and of the recent “whatever it takes” intended to preserve their health,” specify the economists.

Retirees encouraged to contribute more

In the columns of Capital, Arnaud Chéron and Anthony Terriau, professors at Le Mans universities and signatories of the column, detail their idea. To reduce the deficit, the five economists propose “a deindexation of retirement pensions and the elimination of the 10% reduction on their taxation”.

To arrive at this conclusion, economists looked at the main beneficiaries of the public debt, which amounts to 3,000 billion euros, or 110% of GDP.

According to figures, pension payments represent 350 billion euros per year.

To avoid the risk of slowing down economic activity by taxing people in the labor market and businesses, economists recommend involving those who have already left the labor market.

What measures are planned?

The participation of retirees would be conditional. “For the wealthiest 20% of retirees, who earn more than 4,000 euros per month, we could not index pensions to inflation. For another third, whose income is between 2,000 and 4,000 euros, under-indexation should be considered,” explains Arnaud Chéron.

Thanks to this new system, the government could get closer to the target set at 5.1% of the deficit next year. “By targeting certain subcategories and spreading this deindexation over several years, we can achieve results comparable to complete deindexation,” explains Anthony Terriau.

Retirement is not the only expenditure item targeted by the executive. Public spending linked to family benefits, RSA and unemployment insurance is also scrutinized by the State.