{"id":10322,"date":"2026-10-21T06:13:05","date_gmt":"2026-10-21T06:13:05","guid":{"rendered":"https:\/\/sotnews.agency\/?p=10322"},"modified":"2026-10-21T06:13:05","modified_gmt":"2026-10-21T06:13:05","slug":"frances-fiscal-mess-has-only-one-true-solution","status":"publish","type":"post","link":"https:\/\/sotnews.agency\/?p=10322","title":{"rendered":"France’s fiscal mess has only one true solution"},"content":{"rendered":"
\n
\n \t<\/i> Read Time:<\/span>2 Minute, 53 Second <\/div>\n\n <\/div>


\n<\/p>\n

\n

France\u2019s crisis keeps getting more extreme, spilling over the weekend into broader protests that precipitated hundreds of millions of euros in damage and nearly 2,400 arrests. The country\u2019s leaders are rightly focused on curtailing the violence. Yet as they seek ways to placate a frustrated populace, they must be careful not to make a bad fiscal situation worse.<\/p>\n

It\u2019s hard to overstate how dire France\u2019s finances have become, particularly now that worried investors have pushed its 10-year bond yields to almost 5%. If borrowing costs remain this high, the interest rate the government pays will soon exceed the economy\u2019s nominal growth rate. As a result, just stabilizing sovereign debt \u2014 currently about 120% of gross domestic product, among the highest in Europe \u2014 could require running a sustained primary budget surplus of as much as 2% of GDP. That\u2019s a feat France hasn\u2019t achieved since the 1970s.<\/p>\n

The politics of achieving the necessary deficit reduction, estimated to be at least \u20ac125 billion by 2032, could hardly be more fraught. Among potential savings and revenue measures, pension reform stands out: Increasing the retirement age to 65 \u2014 still below the norm among western European peers \u2014 could reap about \u20ac18 billion. Yet when President Emmanuel Macron in 2023 pushed through an (ultimately postponed) increase from 62 to 64, the move triggered some of the country\u2019s largest-ever protests \u2014 albeit rivaled in violence by the weekend\u2019s events \u2014 and contributed to the far-right National Rally party\u2019s success in 2024 elections.<\/p>\n

With presidential elections coming next year, there\u2019s even less appetite for prudence. The current minority government\u2019s 2027 budget proposal, which would reduce the deficit by about \u20ac28 billion, faces stiff opposition. National Rally\u2019s Marine Le Pen, who leads national polling for the next presidential election, sought to calm bond markets with a pledge of fiscal consolidation that contrasts sharply with the tax cuts and spending promises in her platform. Meanwhile, left-wing candidate Jean-Luc M\u00e9lenchon, whose statements have been blamed for inflaming protesters, proposed simply canceling more than \u20ac500 billion in French public debt held by its central bank \u2014 an absurdity that, even if possible, would serve only to spook markets more.<\/p>\n

Eventually, the nation\u2019s leaders will have to recognize that there\u2019s no alternative to boring, unpleasant budget discipline. The longer that takes, the greater the damage will be.<\/p>\n

France\u2019s malaise places it on a collision course with the broader European Union. The longer it delays serious reform, the more precarious its finances will become as it takes on more debt at higher yields. If investors ultimately refuse to lend, the EU and the European Central Bank will face a dilemma: Organize a bailout or let the bloc\u2019s second-largest economy descend into financial chaos. The best-case scenario would entail imposing austerity measures on France potentially harsher than what\u2019s now needed to stabilize its debt. The worst would be an acute crisis involving a French default, bank runs and possibly a breakup of the euro.<\/p>\n

If France\u2019s current minority government can\u2019t act, hopefully the next election will produce leadership capable of delivering the difficult reform the country needs. Even populists have been known to act responsibly when confronted with the immutable facts of public finance. There\u2019s no better way out.<\/p>\n

This editorial was published by Bloomberg and distributed by Tribune Content Agency.<\/span><\/em><\/p>\n

<\/div>\n\n

\n
\n \n
\n \n \"Happy\"\n <\/a>\n
\n Happy <\/div>\n
\n 0<\/span>\n \n 0<\/span> %<\/span>\n <\/div>\n <\/div>\n\n
\n \n \"Sad\"\n <\/a>\n
\n Sad <\/div>\n
\n 0<\/span>\n 0<\/span> %<\/span>\n <\/div>\n <\/div>\n\n
\n \n \"Excited\"\n <\/a>\n
\n Excited <\/div>\n
\n 0<\/span>\n 0<\/span> %<\/span>\n <\/div>\n <\/div>\n\n
\n \n \"Sleepy\"\n <\/a>\n
\n Sleepy <\/div>\n
\n 0<\/span>\n \n 0<\/span> %<\/span>\n <\/div>\n <\/div>\n\n
\n \n \"Angry\"\n <\/a>\n
Angry<\/div>\n
\n 0<\/span>\n 0<\/span> %<\/span>\n \n <\/div>\n <\/div>\n\n
\n \n \"Surprise\"\n <\/a>\n
Surprise<\/div>\n
\n 0<\/span>\n 0<\/span> %<\/span>\n <\/div>\n <\/div>\n\n <\/div>\n <\/div>\n\n ","protected":false},"excerpt":{"rendered":"

France\u2019s crisis keeps getting more extreme, spilling over the weekend into broader protests that precipitated hundreds of millions of euros in damage and nearly 2,400 arrests. The country\u2019s leaders are rightly focused on curtailing the violence. Yet as they seek ways to placate a frustrated populace, they must be careful not to make a bad…<\/p>\n","protected":false},"author":1,"featured_media":10323,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":{"facebook_2277560469115098_106292521332774":"","twitter_aToxNzczMzI3Njk4OTg4ODUxMjAxOw==_1773327698988851200":""},"rop_publish_now_history":[],"rop_publish_now_status":"pending","_monsterinsights_skip_tracking":false,"_templately_pack_id":"","_templately_imported_at":"","_templately_source":"","_templately_import_session_id":"","footnotes":""},"categories":[16,14],"tags":[],"class_list":["post-10322","post","type-post","status-publish","format-standard","has-post-thumbnail","category-korea","category-trending-news"],"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t\n\t\t