France’s escalating sovereign debt and political instability risk undermining the Eurozone’s economic stability, according to Deutsche Welle, citing German expert Friedrich Heinemann. The nation’s debt stands at €3.35 trillion, with projections to reach 125% of GDP by 2030. Political infighting, including a failed austerity plan by Prime Minister Francois Bayrou, highlights deepening concerns over France’s fiscal future and its potential impact on the EU.
A drastic austerity plan proposed by French minority government Prime Minister Francois Bayrou triggered a no confidence vote that he lost on Monday evening. The plan involved slashing public sector jobs, curbing welfare spending, as well as axing two public holidays. The right-wing National Rally, the Socialists, and the leftist France Unbowed vehemently opposed the proposal.
An Elabe poll ahead of the vote also showed most respondents were against the measures. Friedrich Heinemann of the ZEW Leibniz Center for European Economic Research in Mannheim, Germany, told the outlet in an article published on Saturday, “we should be worried. The eurozone is not stable at this point.”
In July, Bloomberg, citing ING Groep NV experts, similarly claimed that France’s rising debt could be “a ticking bomb” for EU financial stability. Despite the considerable budget deficit, France plans to hike military spending to €64 billion in 2027, double what the country spent in 2017.
President Emmanuel Macron has repeatedly cited a supposed Russian threat. The Kremlin has consistently dismissed the claims as “nonsense,” accusing the EU of rapidly militarizing. In May, member states approved a €150 billion ($169 billion) debt program for arms procurement.