France: debt and disaffection
- Paul Temperton
- Jul 8
- 1 min read
Tackling the high level of government deficits and debt levels go hand-in-hand with political disaffection in France. The last 12 months have seen little progress in braking this link. President Macron’s centrist Renaissance party did poorly in European elections in June 2024. Macron reacted with a snap general election, hoping it would strengthen his support, but the opposite was the case. The result was an almost equal three-way split between Marine Le Pen’s far-right National Rally (RN), the left-wing New Popular Front and a centrist grouping including Macron’s. Michel Barnier, a veteran politician, was appointed prime minister but failed to draw up a deficit-cutting budget that could secure broad parliamentary approval. Francois Bayrou, the prime minister since Barnier resigned in December 2024, has had little success. Prospects for approval of a 2026 budget look dim and Bayrou faced a no confidence vote, triggered by his latest reform plans, in July 2025.
The spread between French and German government bond yields remains the key French risk barometer. It has been at a heightened level since summer 2024. The prospect of a renewed narrowing seems slim. French government finances are deeply unsustainable, with the government debt/ GDP ratio almost certain to continue trending higher in the coming years.
