France’s debts are now the third largest in the world, after the US and Japan
France, it is all pretty much business as usual
C’est normal, as they would put it on the other side of the Channel.
The Government is teetering on the edge of collapse, the budget is out of control, there are emergency tax rises on the way and the rioters are gearing up for protests on the streets.
François Bayrou, the prime minister, has called a vote of confidence for Sept 8. It may well prove a brave but foolish decision.
State spending has hit 58pc of GPP, while taxes drain 47pc of the economy.
The deficit is forecast to hit 5.7pc of GDP this year, while its debt-to-GDP ratio is over 113pc
First, keep an eye on the banks. Shares in Societe Generale were down 10pc over the last five days, while BNP Paribas was down by 8pc.
What’s up?
French government debt accounts for 3pc of the banking sector’s total assets and 71pc of “tier 1 capital”.
If there are substantial losses on those holdings, one or more of the major banks may face a collapse.
Even if there are worries about that, it could trigger a run on the banks
The French budget crisis may look like a purely domestic matter.
But let’s keep this point in mind. France’s debts are now the third largest in the world, after the US and Japan.
Matthew Lynn Telegraph 31 August 2025
RE: USA och Japan har egna valutor som flyter.
Franrike har inga Franc, de har euron, därmed lyder de under ECB och de regler som Euroländerna måste underkasta sig.
To avoid being forced to resign, Bayrou must convince either the far right or leftist lawmakers to abstain, going back on their pledges to vote against him.
The likely downfall of Bayrou would plunge France back into acute political uncertainty and heighten doubts over whether any government will be able to rein in the largest budget deficit in the euro area.
Bloomberg 29 August 2025
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