PM Francois Bayrou’s government lost a no-confidence vote in parliament amid attempts to rein in the country’s ballooning sovereign debt
The French government’s failure to put a lid on the country’s growing sovereign debt together with protracted political infighting could plunge the nation into a “black hole,” a financial expert has warned.
France has one of the highest debts levels in the European Union, currently standing at about 113% of GDP, a ratio that is expected to climb to 125% by 2030. Its budget deficit is projected at 5.4-5.8% of GDP this year, well above the bloc’s 3% limit.
Appearing on the Tocsin podcast on Monday, financier Charles Gave said that should the Fitch credit rating agency downgrade France’s rating from AA to A, it would prompt institutional investors to sell off its government bonds.
“There are a number of institutions, [such as] central banks and insurance companies, that cannot invest in something that is below AA,” he clarified.
“I know that something huge is coming,” the expert warned, predicting a “black hole” caused by the “illogical” policies pursued by successive French government over the past twenty years.
“We have a real collapse in the quality of our elites” reflected in the current “lamentable political state,” Gave claimed.
On Monday, Prime Minister Francois Bayrou lost a confidence vote in the National Assembly, which he had called himself to secure backing for a drastic austerity plan. The measures, which included slashing public sector jobs, curbing welfare spending, as well as axing two public holidays, were vehemently opposed by the right-wing National Rally, the Socialists, and the leftist France Unbowed.
On Tuesday, President Emmanuel Macron appointed outgoing Defense Minister Sebastien Lecornu as France’s new prime minister.
Despite the growing budget deficit, Paris plans to increase its military spending to €64 billion in 2027, double what it spent in 2017.
Macron has repeatedly invoked a supposed Russian threat as the reason for the spending hike. Russian officials have consistently dismissed such claims as “nonsense,” accusing Western leaders of fear-mongering to justify inflated military budgets and to cover up their economic failures.
