France runs out of cash until end of the year

From midnight on Monday until the end of the year France will have to use borrowed money after spending all of the €390 billion it raised through taxes, a new survey showed on Monday

France runs out of cash until end of the year
France will have to top up its credit cards until the end of the year.

From Tuesday until the end of the year – a full 53 days – France will have to survive on credit.

In other words the country has blown the €390 billion in tax receipts earned this year and will now have to add to the two trillion euros of debt on its credit cards, with this year's spending set to hit €460 billion.

That’s the conclusion drawn by survey from the liberal think tank the Molinari Institute that looked at the 28 member states of the EU and calculated the day when each one has spent all their tax receipts.

For France 2015 will be the 35th consecutive year it has run an imbalanced budget

According to the institute “France is one of the rare countries, along with Belgium, the Netherlands, Poland and Slovakia, to build up debts in all three areas of the administration – central state, local authorities and social security.”

The study includes a chart which shows the date when each country has spent its incomings and while France is November 9th, it is not far ahead of Britain which runs out of money on November 11th.

Ireland will go into debt on November 23th, while Italy hits the red two days earlier. Sweden will still have some money in its pockets until December 15th, while Germany and Denmark will actually have some cash left over at the end of the year.

On average EU states have spent all their tax receipts 37 days before the end of the year, whereas back in 2009 they had blown the budget 72 days before New Year’s Eve. However before the financial crisis kicked off in 2008, EU states had money to spend until just 19 days before the end of the year.

Cecile Philippe, director of the Molinari Institute, whose studies paint France’s economy in a bad light, said: “Unlike the rest of the EU, French public spending continues to grow. It has now reached 57.5 percent of GDP.

“This gap between France and the rest of the EU shows the scale of the challenges in a country where it is common to stigmatize 'budgetary austerity'.”

“We have got to a point where we have an unequal level of spending and tax revenues, which only multiplies the negative effects and hampers the chances of a sustainable recovery that will allow us to drastically reduce unemployment.”

In September 2014 it was revealed that France’s public debt had passed the symbolic two trillion mark. In real numbers that's €2,000,000,000,000.

The only positive thing for France is that it is still able to borrow money at record low interest rates.

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Courtier: Should you hire a broker when buying property in France?

If you're researching the French property market, you might have come across mentions of 'courtiers' - here's what they do and whether they are necessary.

Courtier: Should you hire a broker when buying property in France?

The French ‘courtier‘ is usually translated as a broker, and the Notaires Association describes their role like this: “the broker is a true intermediary in banking operations. His/her role is to negotiate the best rates for you, but not only that: they will also find the most advantageous financing conditions for the realisation of your project.”

Essentially they act as an intermediary between you and the banks, so they’re only required if you need a mortgage or a loan in order to buy your French property. 

Their job is to research the best deals for you and then to help you put together your application and ensure that all your paperwork is correct – unlike the notaire, instructing a courtier is not a required part of the process, so the decision on whether to instruct one is up to you. 

So is it worth it?

Among French buyers, around 30 percent of mortgages are obtained using the services of a courtier, and this rises to 60 percent among young, first-time buyers, who generally find it harder to access credit.

Some of things to consider are your level of French and confidence in negotiating French bureaucracy, your financial situation (since French mortgage lenders tend to be stricter than those in the UK or US) and whether you currently live in France or not (since there are extra hoops to jump through for overseas buyers).

READ ALSO Is now a good time to buy a home in France?

“Things have changed,” Trevor Leggett, group president of Leggett International estate agents, told The Local. “It’s now more important than ever to work closely with a reputable broker.

“In France it is all paper-based, very old-school and extremely bureaucratic, a different world entirely to the UK. Preparing the client “dossier” so that it will be accepted is an art form.”

READ ALSO MAP: Where in France can you buy property for less than €100k?

He advised non-resident international clients, particularly, who may not be au fait with the French system to seek the help of a broker who knows the ropes.

“The question is no longer really about savings,” he said. “It is about finding a bank that can actually lend to the client profile, interests rate are secondary. 

“It occasionally happens that one bank can be played off against another, or to shop around, but it’s a rare event nowadays.”

READ ALSO Revealed: The ‘hidden’ extra costs when buying property in France

And he had no hesitation in recommending that prospective buyers find a broker to sort out the financing.

“The lending market has tightened for international buyers and a good one is worth their weight in gold,” he said.

READ ALSO EXPLAINED: Time-frame for buying and selling property in France

In France, you make an offer on a property and then you begin the mortgage process (while in the UK it’s the other way round) so problems in getting your mortgage approved could lead to you losing your dream property.

“[Using a courtier] can be the difference between buying and not,” added Trevor.

“It’s not just any possible language barrier – but understanding the process and the different players in the market.”

How much?

The cost of hiring a courtier is borne by the buyer – but how much do they charge?

The courtier usually charges a percentage of the total mortgage amount – fees must be fixed in advance and are only payable once your mortgage application has been approved. 

Fees vary between different areas and different businesses, but the average fee is €2,000, which amounts to around one percent of the purchase price.

Many brokers set a minimum amount – around €1,500 – for smaller loans, and take a percentage of larger loans, so how much you pay depends on your property budget.