Debt: two days before Moody's verdict, the illusion of cancellation and the urgency of fairness

On Friday 23 October, the agency Moody's is due to deliver its verdict on France's credit rating. According to TF1 Info and economists interviewed by BFM Business, a downgrade would be likely. At the same time, Jean-Luc Mélenchon's proposal to cancel the share of the debt held by the European Central Bank is back in the presidential debate. Two opposing ways of talking about the same problem, which deserve to be examined without caricature.

The facts

According to Agence France Trésor, Moody's has rated France Aa3 with a negative outlook since April 2026. As Reuters reported in early October, the agency then considered the adoption of the 2027 budget highly uncertain and saw no quick way out of political fragmentation. The situation has not cleared since: according to the economic press, the vote on the revenue section of the finance bill has been postponed to 27 October, as more than 2,000 amendments could not be examined in time.

The figures are well known. According to INSEE, public debt stood at 3,595.5 billion euros at the end of the second quarter of 2026, or 119% of GDP, compared with 117.5% three months earlier. It rose by nearly 60 billion in a single quarter.

It is in this context that Jean-Luc Mélenchon is defending his idea. On his blog, the La France insoumise candidate proposes to "freeze" the securities held by the ECB, which in his view represent about one fifth of French debt. Public Sénat and Euronews put the figure at around 18% of the debt, some 600 billion euros according to Euronews. At the Braderie de Lille, L'Express reports, he specified that he was targeting only the debt held by the ECB, not that owed to private lenders.

The positions at stake

The case made by La France insoumise should first be set out fairly. For Jean-Luc Mélenchon, the operation would be a mere accounting entry on the central bank's balance sheet, with no loser. He points out that Germany benefited in 1953 from a large cancellation of its debts and envisages a coalition with Italy, Spain, Greece and Belgium. The banker Matthieu Pigasse defends a similar idea. And public opinion is not hostile: according to a YouGov poll for HuffPost cited by L'Express, 47% of French people were in favour in early September, against 31% opposed.

The objections are many. Legally, the treaties prohibit the monetary financing of States, and the Banque de France does not decide alone: it belongs to the Eurosystem, whose Governing Council is collegial. Thierry Breton, quoted by Euronews, considers the operation impossible for this reason. Christine Lagarde called it "inconceivable" in 2021, Public Sénat recalls. Economically, Olivier Blanchard, former chief economist of the IMF, argues according to Euronews that the State would save on interest but lose the same amount in the profits the Banque de France pays it. Finally, economists interviewed by Public Sénat fear a signal of distrust towards all creditors, and therefore higher interest rates. On the right, Jordan Bardella has warned about investor concern; within the government, Economy Minister Roland Lescure speaks of a risk of financial crisis.

The analysis

The debate is badly framed on both sides. The proposal from La France insoumise touches on a real issue: interest charges weigh more and more on the budget and deprive the State of room for schools, hospitals or the ecological transition. But it promises a painless solution to a problem that is not painless. If Olivier Blanchard is right, the net gain would be small; if markets react as the economists cited fear, it would even be negative. Above all, a France acting alone would break with its European partners. For a Gaullist tradition attached to the word of the State, sovereignty does not mean reneging on one's commitments, but keeping control of one's financial destiny.

Conversely, those who reduce the question to the agencies' rating miss the essential point. A downgrade is not a moral fate; it is the observation of a political deadlock. And the way out of this deadlock cannot rest solely on public services or pensioners. Restoring the public accounts is only acceptable if it is fair: a contribution from the largest fortunes, a determined fight against tax optimisation, a review of business subsidies granted without conditions.

Jean-Luc Mélenchon's unintended merit is to remind us that debt is also a European matter. After Covid, the Union managed to borrow jointly in order to invest. It is on this ground, that of a European investment capacity for climate, energy and defence, that France could carry weight, with allies rather than against them.

Conclusion

On Friday, Moody's will judge our ability to decide more than our figures. The best response would be neither magical cancellation nor blind austerity, but an adopted budget, fair in the sharing of the effort, and a French initiative to relaunch European investment borrowing. The question is put to the 2027 candidates: who will dare to propose a recovery that sacrifices neither the word of France nor social justice?

Article written with the help of artificial intelligence.