In a fee of weak growth, high -cost borrowing and an ever -increasing debt leaves the France The collapse of the Bayrou government yesterday (9.9.25),
OR Rejection of Prime Minister François Bairou’s government by the MPs of the France’s National Assembly It crushed all hope of serious progress next year in relation to France’s fiscal deficit, which is the largest in the eurozone, feeding on its public debt.
The French government debt is increased by 5,000 euros per second, according to Bayrou. The cost of serving its obligations is expected to reach 75 billion euros next year, he also said.
However, opposition parties overturned the veteran center political and with him his plans for A fiscal adjustment of 44 billion euros.
“There is no good scenario, there is no way out, there is no reliable scenario where you end up with the same amount of fiscal consolidation,” said Frederick Dukroze, head of macroeconomic research at Pictet Wealth Management.
Finance Minister Eric Lobard acknowledged that the next government, which must draw up a 2026 budget to October 7, would be less ambitious than Bairou, according to Reuters.
Bayrou’s successor is also likely to rely more on taxes than on expenditure cuts to reduce the budget deficit, with the Socialists – from the classes of which the next prime minister could come from – to call for 15 billion euros in taxes.
However, financial markets may disapprove of tax increases, fearing that they can drown growth – something that is already anxious in Britain.
“What we are increasingly seeing is a reluctance of market participants to approve the path of tax increase as a sustainable way to reduce major fiscal deficits,” said Russel Matthews, a portfolio manager at RBC Bluebay Asset Management, who bets against the French.
“It just becomes less reliable,” he said.
Trap
Macron It does not signal plans for the present announcement of early parliamentary elections, and polls show that this would not necessarily give the majority to any party and will not lift the impasse.
With the political situation in France being in chaos and its public finances in the back, households and businesses are already hesitant to spend or investing.
“Retail customers are like companies. The greater the promotion you have, the more you can invest and spend money on the future, “Fabrice Kaboliv, head of the Renault Development Development, told Reuters.
Slow growth is particularly problematic for a high -debt country such as France, because it can not simply be based on its debt recovery, which reached 3.3 trillion euros in June or 114% of GDP.
This is lower than 153% of Greece or 138% of Italy. But, unlike France, both countries have significant surpluses in the budget before taking into account interest payments.
France’s debt payments are expected to reach more than 100 billion euros by 2029 – from 59 billion in 2024 – making the largest budget output if growth slows down or decrease the deficit relaxed, warned the COURTES Auditors earlier this year.
In the meantime, Germany’s plans to invest billions of euros in Europe’s largest economy after years of retention leave France in an unpleasant position.
“The situation is improving everywhere except France, which has become a bit of a bad duck,” said Oxford Economics economist Lio Barinkou.
With constantly slow growth and huge debt, Italy has long been Europe’s troubled child for financial markets, but “now France is clearly becoming this country,” he added.
What do investors say
The French bond market, the largest in the eurozone, was once considered one of the main safe alternatives for investors looking beyond Germany.
But since early parliamentary elections have led to a deadlock in Parliament last year, France has remained to pay a higher risk premium for its debt.
OR Francewhich is facing a credit rating decision by Fitch her Friday 12 September 2025, It now pays more for long -term debt from Greece and Spaincountries found at the heart of the eurozone debt crisis in 2011, and almost the same as Italy.
At the beginning of 2024, the cost of borrowing the 10 -year Italian bond was more than an entire percentage point higher than that of France.
Economist Mathieu Plane at Think-Tank Opece said the greatest risk was that France would have to pay a high risk premium in the midst of a political impasse.
“Then there will be a few decisions on long -term, innovation, education, everything that can lead to future development,” he said.