Is France now Greece on the Seine?
Subscribe to enjoy similar stories. Investors are fretting that France may be on the verge of triggering a new eurozone crisis, and the amazing thing is that it took this long for everyone to notice that the country’s public finances, and its economy, are a mess. We don’t mean to make light of the worry gripping markets in recent days as the National Assembly has failed to pass a budget.
The euro fell about 1% against the dollar Monday amid the machinations in Paris, and for a period the yield on France’s sovereign debt was higher than Greece’s. The spread between French yields and eurozone benchmark German bunds last week briefly hit its largest since 2012. But it’s strange that this should happen as a result of the failure of a budget plan that’s largely illusory anyway.
Prime Minister Michel Barnier, appointed less than three months ago by President Emmanuel Macron, failed to secure support for the first part of his budget in the National Assembly. He tried Monday to push the budget through by decree, paving the way for a no-confidence motion as early as Wednesday. Mr.
Macron’s job is safe, but Mr. Barnier’s isn’t. The National Assembly is evenly split among three incompatible factions after Mr.
Macron’s snap-election gambit this summer led to a surge of the insurgent right and populist left rather than a boost for Mr. Macron’s centrists. Brussels technocrats and many investors are worried about the details of the Barnier budget, on the theory that he could reduce France’s projected fiscal deficit of 6.1% of GDP this year to something nearer the eurozone’s 3% annual target by 2029.
But Mr. Barnier mostly tinkered around the edges with adjustments to inflation-indexation of pensions and the like. Some of his proposed
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