The public debt wall is the feeling of excessive constraint limiting the government’s ability to carry out its policies.

Too much debt would limit its capacity for action.

Public debt is certainly significant at present, but the history of French debt bears witness to much more difficult periods. The graph bears witness to this.

Graph – French Debt to GDP Ratio 1815-2024

In the past, debt increased during conflicts. In 1870 and then during the two world wars, the increase in debt was dramatic. Immediate needs were then paid for with a debt that would be repaid later.

↪️ The new thing is that France is in a period of peace. There is no conflict to finance.

Too limited growth, insufficient productivity gains, and a preference for the immediate social model underlie this rapid rise in debt. There will be no reconstruction to boost growth and reduce the debt-to-GDP ratio as seen after wars.

↪️ The wall of debt inevitably refers to the wall of money that, in 1936, had constrained the Popular Front in its desire to reform the French economy and society. It is a marker that was still evoked in the early 1980s after the election of François Mitterrand.

Now the field is no longer the same. Debt is increasing in an almost deterministic way.

🔹 The term “debt wall” suggests that there is a limit, a debt ratio that would become excessive and penalize the entire economy. No such threshold exists.

In 2010, Ken Rogoff and Carmen Reinhart suggested a debt ratio of 90%, at which point growth would be penalized. This caused controversy, but the calculation was wrong.

↪️ The real problem with public debt is that there is no objective measurement. Economists therefore resort to sustainability measures. Is the debt trajectory sustainable over time, given the assumptions made?

➡️ The debt wall does not exist as such. What exists is the inability of a society, an economy, or a government to match their wishes with the economy’s ability to respond. If the various components of the economy are unwilling to adjust, then the debt wall reflects the risk that investors no longer want to take.