2. Financing Public Investment in France

Abstract

The chapter first deals with the historical evolution of public investment and capital in France. While still high in comparison with other EU countries, it was significantly reduced since the early 1990s. A reversal of the trend, prior to COVID-19, was mostly due to local governments. After COVID-19, a rebound was followed by flat growth; investment in 2023 is barely at 2019 levels. The result of these trends is a significant drop in net public wealth (mostly of the central government) since 2008. Funding exhibits a growing diversity. Investment spending is increasingly characterised by co-financing involving multiple actors, reducing the central-government share. The chapter concludes with an assessment of the sustainability of France’s public finances. The critical gap (g-r) remains positive for France even in the current environment of high inflation and increasing interest rates. We conclude, with some caution, that there is no real cause for concern regarding sustainability.