France “Could Trigger Next Financial Crash” as Government Set to Fall Amid Bankruptcy Worries
Is France about to trigger the next financial crash? That’s the question Matthew Lynn is asking in the Spectator as François Bayrou’s Government looks set to fall after failing to pass yet another Budget. Here’s an excerpt.
Its debts are out of control. There is very little space left to raise taxes any further. And the political establishment can’t agree on anything apart from postponing the whole issue for another year or two. It is a description that could apply to plenty of countries, and not least the UK. But right now, it is one that applies most acutely to France. With yet another government about to fall, and the CAC-40 stock market index falling sharply, the real question is this: will Paris be the centre of the next financial crash?
The French Prime Minister François Bayrou yesterday took the plucky, if foolish, decision to recall Parliament on September 8th for a vote of confidence. He is struggling to pass a Budget that would put in place some modest controls on public spending – not cuts, of course, but a slowdown in the rate of increase – as well as some symbolic gestures such as scrapping two public holidays. It seems highly likely that Bayrou will lose his vote of confidence. As such, the Government will fall and President Emmanuel Macron will have to look for another PM – or else call fresh elections.
It is hardly surprising that investors are growing increasingly nervous about France’s debt. The deficit is forecast to exceed 5% of GDP this year and may well go over 6%. Economic growth has ground to a halt. The tax rises imposed last year have done nothing to fix the hole in the nation’s finances, while the debt-to-GDP ratio has climbed over 110% and state spending now accounts for 58% of total output. Lots of European countries are addicted to state spending, but France is leading the way. It already has the third largest stock of outstanding debt in the world, after the far larger American and Japanese economies, and yet it keeps adding to it.
With shares in major French banks down by up to 7% today, Paris is looking increasingly like the trigger for the next financial crash, says Lynn.
Worth reading in full.
Stop Press: The German welfare state is no longer financially sustainable, Chancellor Friedrich Merz has said.
Stop Press 2: Britain’s long-term borrowing costs are nearing their highest level since 1998 as Rachel Reeves fails to balance the public finances.
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What about those 15 million Muzzies in France? 50% unemployed? Surely they can step into the breach and bail out their ‘new home’, ie their Jihad-conquered, Dhimmi territory.
I am sure the LDs and the Rona plandemic, the endless war on Russia and all those teat sucking Muslims have nothing to do with their insolvency….socialism bites. So does reality.
It is all planned for Ferd.
This could also bring down the Eurozone which is stretched too far already. With France openly unable to support it and Germany too the EZ is supported by hope and little else.
Sadly I suspect the UK is still on the hook for EZ and EU liabilities. The Tory governments signed us up as guarantors and failed to cancel the obligations after the 2016 vote.
The ECB and the rest of the EU establishment will step in providing the necessary “liquidity” , i.e. print money, before any crash occurs.
The one thing that we can be certain of is the continued debasement of the currency.
France has only survived this long on EU subsidies.
All States with unaffordable welfare-states, with increasing proportion of the population one way or another on the government payroll, creating no wealth just consuming it, will fall.
State’s directing economies always will end up in economic crisis and collapse – just a matter of when. That certainly applies to all European States and the UK.
But unlike the UK, France being part of the €uro cannot print its own money, and has no control over monetary policy (interest rates), so it cannot devalue its money to make its exports cheaper, imports dearer and so cannot boost economic activity and make an internal economic adjustment.
It also “benefits” from being part of the Fourth Reich, currently circling the drain.
I imagine the likes of the WEF, IMF, Blackrock and the rest are running a bloody book on this.
The EU (and attendant acronyms) was created to support French agriculture and German manufacturing, in the main.
It is no longer supporting them, but the main point is that French agriculture is still very much in existence and highly distributed, while German manufacturing is weak and standing on very few columns.
I feel that the French are a lot less… obedient especially when it comes to tax matters. Meaning private wealth exists to a greater extent than in Germany.
When a French government decides to steal French farms the war will really kick off and God help the politicos then.
Not true and you would find this out if you read the definitve book on the EU. The CAP was created to mollycoddle French peasant farmers though who have small inefficient holdings probably going back to feudal times.
They may be small but they are many and what the hell does “inefficient” mean? They don’t do the “economies of scale”, and that is precisely my point. See Hux’s comment above.
It is thanks to Dutch and French farmers that Ursula Von der Leyen didn’t get her way the last time she tried.
And the likes of Bill Gates find it a lot harder to buy up agricultural land when instead of one massive farmer they find a hundred small ones.
Well, I hope they don’t apply for an IMF loan, or there won’t be any left for us when we go bankrupt.
Which from Liam Halligan in the Mail will depend on the incompetent Chanellor’s October budget as the economy reels from her one last year. He throws up an interesting choice – once Blubbing Rachel has been despatched to a secretarial job somewhere, does Two Tier go for a sensible costcutting budget that will have his Far Left communists and immigrants frothing at the mouth and looking for a vote of no confidence. If he does then what will be the reaction from the other MPs if he requests their support to see his budget through? I would suggest that both the Tories and Reform might not be ready should the government collapse and prefer to see Two Tier struggle on a bit longer.
No wonder Micron’s so keen on a war with Russia.
When all else fails – and in France it has – they start a war.
We’ll have to hope that Two-Tier is forced, by public pressure, to keep us out of it.
The future looks really bleak for these and other reasons. I’m glad I’m 56 and not my children’s age. I feel really bad we’ve made this their world.