France · New York · Fortune Technology
‘France, truly, is on the brink’ and just days away from a make-or-break moment in its debt crisis, analyst warns
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Nationwide protests over the high cost of living roiled France on Saturday, adding to turmoil over public spending and debt ahead of a critical vote in the National Assembly.
Key facts
- France’s public debt is now a record $4 trillion, or 119% of GDP—the highest ratio since the immediate aftermath of World War II
- Sébastien Lecornu, the latest in a revolving door of prime ministers, has proposed a 2027 budget that would modestly bring the deficit down to 5% of GDP from 5.4%, and faces a first critical vote
- Indeed, far-right leader Marine Le Pen has vowed to roll back the official retirement age to 62 and even previously suggested dropping it to as low as 60
- At the same time, France’s looming debt has sent bond yields to the highest levels in 24 years, flashing warning signs not seen since the eurozone debt crisis in 2011
Summary
Rioting broke out in some cities as luxury boutiques and supermarkets were looted while public buildings were defaced and even set on fire. That followed mass demonstrations earlier this month, with students decrying run-down classrooms, missing teachers, and buildings that aren’t equipped for rising temperatures. At the same time, France’s looming debt has sent bond yields to the highest levels in 24 years, flashing warning signs not seen since the eurozone debt crisis in 2011. With far-right and far-left candidates in the lead to become France’s next president in the spring, markets are losing confidence that either side will take the painful steps necessary to rein in the deficit.