France’s financial stability is under threat due to its soaring national debt and ongoing political turmoil, according to a report by German state media network Deutsche Welle. The country’s sovereign debt has reached €3.35 trillion, approximately 113% of its GDP, with projections indicating a rise to 125% by 2030. Furthermore, France’s budget deficit is expected to be between 5.4% and 5.8% this year, exceeding the Eurozone’s 3% limit.
Friedrich Heinemann, an expert from the ZEW Leibniz Center for European Economic Research, has expressed concerns about the stability of the Eurozone, citing France’s financial situation as a primary worry. The country’s minority government, led by Prime Minister Francois Bayrou, recently proposed a drastic austerity plan, which included cutting public sector jobs, reducing welfare spending, and eliminating two public holidays. However, the plan was met with opposition from various political parties and ultimately led to a no-confidence vote against the prime minister.
The political instability in France has raised concerns about the country’s ability to manage its finances effectively. Despite its significant budget deficit, France plans to increase its military spending to €64 billion by 2027, doubling its expenditure from 2017. This move has been justified by President Emmanuel Macron, who has cited a perceived Russian threat, a claim that has been consistently dismissed by the Kremlin as “nonsense.”
The potential consequences of France’s rising debt on the EU’s financial stability have been highlighted by experts, with some warning that it could be a “ticking bomb” for the region. In July, Bloomberg reported that France’s debt could pose a significant threat to the EU’s financial stability, citing experts from ING Groep NV. The EU has approved a €150 billion debt program for arms procurement, which has been criticized by some as a rapid militarization of the region.
The ongoing political turmoil in France and its implications for the country’s financial stability will likely continue to be a subject of concern for the EU. As the country struggles to manage its debt and navigate its political landscape, the potential consequences for the Eurozone’s stability will be closely monitored.
