And the question of social niches will not be avoided

Public deficit will widen to more than 7 of GDP, but Nicolas Sarkozy yesterday refused to discuss any plan of reconciliation of accounts: no tax hikes, strict policy step ("it has always failed"), either during or after the crisis. On the contrary, the head of State has shelled a long series of investment considered unavoidable to emerge strengthened from the crisis: re-industrialization, support for youth and the unemployed, universities and schools, Grand Paris, etc. "we believe the growth of tomorrow", he said, adding that to catch "of investment" of the France, the first work of the next Government should be to define "strategic areas" for which he will be "the means". These new spending will be financed by a loan terms and conditions will be defined in the fall: it will be launched "either to the French, or financial markets."

"A question of pedagogy".

The distinction is not fortuitous: the idea of a great popular loan had been launched in the fall by the President of the National Assembly, Bernard Accoyer (UMP), and, as a first step, had curtly rejected by... Nicolas Sarkozy (priority was to support the banks), before that his Special Adviser, Henri Guaino, réévoque project ("Les Echos" from March 16).

The objective is to federate the savers around an economic project. But for many voices in the Government against this option: to attract individuals, the State should offer a higher rate than the market and would thus increase the cost of the debt. Bercy memories indeed very bad of the precedent of 1993 (see opposite). When rise of inflation and the interest rates in the coming years, the State could certainly make a good case, but with the risk, this time a strong resentment of those who have obtained the loan.

Is therefore an open question of the terms and conditions. If the loan was to market, the distinction with the other operations of the Agency France Treasury would be fairly formal (this last comes to realize successfully a thirty-year bond issue). "The announcement of a new loan something surreal, because of the loan, it is every day", has also reacted François Bayrou, President of the Modem. In fact, this does nothing the problem of soaring deficits and debt. "The loan, it is more a matter of pedagogy", made relative is in the Elysee Palace, where more emphasis on the "Refoundation of the manner in which it envisages public spending".

"Deficit preparing the future".

Earlier this month, Christine Lagarde, the Minister for the economy, had, without much success, pleaded with his European counterparts to operate a distinction between "structural" deficit and deficit "of crisis", the latter requiring more time to be resorbed. Nicolas Sarkozy has promised yesterday that "the entire revenue growth" would be dedicated "after the crisis." But he added a third floor, relying on the "deficit preparing the future", namely the investment spending, it is therefore extremely with the loan. "This légitimera even more stringent rules on operating expenses," said in the Elysee Palace, by putting forward the reform of local communities. Similarly is there, in the social sphere, extent of pension reform. And the question of social niches "will not be avoided."

But in the end, how will change overall public expenditure, while the Government said the rule of the "zero volume" for years, namely, an evolution of the State expenses limited to inflation (a rule already bypassed by stimulus spending) For Nicolas Sarkozy, the key lies in 'quality' of the expenditure. Didier Migaud, President of the National Assembly Finance Committee (PS), the head of State will "play the shows to see painful decisions in the wake of the presidential election of 2012."

More short term, another problem arises: letters-ceiling fixing the budgets of the ministries for 2010 have already been sent and it is not simple to integrate any new investment spending. Eric Woerth, Minister of the Budget, will have to clarify this point, tomorrow, to the Assembly during a hearing preparing the budget orientation debate.