Good evening Stéphane Boujnah, welcome to the set of Quotidien. Here is part of the team and the audience. You are the CEO of the Euronext managing board. Euronext is the company that manages the Paris stock exchange and a large part of the European stock markets, including Frankfurt and Amsterdam. I...
Not Frankfurt, Amsterdam. In simple terms.
What does your job consist of? And what is Euronext, too?
No, but Euronext is a group of European stock exchanges in Oslo, Dublin, Amsterdam, Brussels, and Athens that together try to solve the problems of financing the real economy. In other words, a stock exchange is a place where we solve the problem of people who have too much money and no ideas or projects, and people who have plenty of projects and no money. And so, for centuries, these people have met at a stock exchange where those who need money raise it from those seeking a return on their savings. That is what the stock exchange is. It is a way for people who need to take risks, to try things that haven't existed before or are complicated, where there is no certainty or visibility that they will be able to make money right away. Because if you know you are going to make money, you borrow from the bank. And if you cannot borrow from the bank because it is too risky or too innovative, then you must raise capital from people who take the risk of winning it all or losing it all. And that is called the stock market.
And your role, briefly, what is it?
Ah, I am a company executive. So, I try to ensure that everyone knows where we are going, to make sure everyone wants to go where we are going, and to make sure we can keep going by generating more results than the resources we consume. But above all, it is a European project, it is very important, where all the places I mentioned have decided to succeed together rather than fail separately in their own village. Because on a global scale, my village in Paris is a little bigger than someone else's village elsewhere in Europe. But on a European scale, it really is about creating a sort of Airbus of finance. And it's a success, since we now have a platform based mainly in Paris and Amsterdam that accounts for twice the volume traded in London. Today, Euronext is twice as large as the London Stock Exchange.
So, in Les Échos this morning, I read: "French rates at 5%, the warning threshold." Everyone is starting to panic seriously, even more so since the violence last Saturday. What do you have to say?
Well, I say that this 5% rate everyone is talking about is the consequence of a certain number of difficulties we have accumulated. The first is that our starting point is that we are the country that collects the most taxes and levies from the population, about 44%. There is no developed country that collects as many taxes and levies. But we are also the country that spends the most money on public expenditure, about 57%. No developed country spends as much as that. But we are also the country that has been accumulating public deficits for the longest time. So, this will be our 5th year with more than a 5% deficit. But we are also the country whose debt stock is increasing the most, because all other countries have reduced their debt stock since Covid. Ours has continued to rise, and so the people who lend to us say, "Okay, we're willing to keep lending to you, but it's more expensive, and it's getting more expensive." And it's true that...
5%, so people realize, how many billions is that?
Well, the difference—to make it clearer—between what we paid last year for our debt service and what we will pay this year is about 12 billion. Which is to say, the equivalent of the justice budget.
More, yes, more. And to answer your question a bit more precisely, we will pay about 91 billion euros next year. What is 91 billion euros? It is the entirety of the income tax that all of us in this room, and the people around us in Île-de-France and the rest of France—all French residents—the entire income tax we paid this year will go entirely toward paying the debt service. There is a lot of talk about a snowball effect, a situation becoming uncontrollable because the debt is becoming increasingly expensive.
So, what is true is that the main cause of our widening deficits is that we have to pay more and more for our debt. When you have—it's quite simple—when you have a stock of debt that is rising, when you have deficits accumulating, meaning every year you spend more than you earn, and that piles up on top of having to pay interest on last year's debt. So every year, you pay interest on the deficits you've stacked up in previous years, plus the new deficits. That comes out to about 160 billion in extra debt this year. And when you also have to apply rising interest rates to that debt, well, you have an over-indebtedness problem, and that's what we are experiencing.
Are we over-indebted, or are we straight-up bankrupt?
No, we are not bankrupt. France does not face a Greek-style risk. There is no solvency or liquidity risk. But there is a risk that has nothing to do with the rest of the world. It is a risk of suffocation. It is a risk of addiction. It's not—we don't have a lender problem for now. We have a problem with our own addiction, deciding to pass on, to spend more than we generate in resources, to spend more than our demographics and growth allow, and to leave all that to our children. And others say: "Fine, but since it's becoming more and more significant, it's getting more expensive." So it is up to us to decide whether we want all income tax to go to creditors or if we want to fund a bit of the future.
But then, how do we get out of this? Some have...
How is it easy to get out of it?
Well, I think it's difficult, but it's possible. Why? First of all, because we've done it in the past. You have to understand that...
Well, the history of France is...
I'll cancel the debt. No, no, but wait, we'll talk about that later because it's an important subject, uh, that, that, that's...
I'll come back to it. I'll come back to it, but I'll answer first. We can't recommend it, but I think we can do it because in 1946, that was a very long time ago. We made that big effort during a time of national unity. Maurice Thorez, the Communist Minister of Production, was in General de Gaulle's government. In '58 and '59, we had an extremely difficult situation to resolve. We mostly resolved it. Well, I'll say, we did it; we did it in '83 with the austerity turn, we did it in '97 to qualify France for the Euro.
Do the effects happen easily each time we do it, like in '46 or '58? Are the effects visible quickly or not?
It depends on the problem we have to solve. Certainly, the difference between the situation back then and today is that we've gotten into the habit of piling up debt or isolating ourselves from the rest of the world. For example, one of the difficulties we have is that in the past, when the country was poorly managed, there was devaluation. So it was very hard for the French people because suddenly everything imported became much more expensive. But on the other hand, the message from the rest of the world arrived much sooner. Now we have a common currency. So when we step out of line, it's mutualized and deferred within the framework of the cooperation we have with the countries that pooled their currency with ours. So it's true that...
What did we do on those specific dates?
What we did—I'll take a more recent example to answer the question, because you might tell me all of that is very far away. I just wanted to point out that we did it. Yeah. No, what we need to do is what everyone else is doing. In fact, what we must understand is that we are not on an island and...
Who are the others? Portugal, Spain.
But even in the 90s, Denmark and Sweden.
In the 90s, Denmark and Sweden; in the 2000s, Germany; in the 2010s, Italy and Spain; in the 2020s, because it's painful for the French, it will have to be said. And what did they do? They raised the retirement age to 67. They did...
Ah, I heard some people reacting back there.
Okay. So that's the pension or the VAT.
