France flirts with defaulting on EU standards as debt bomb, political chaos shakes markets

France is locked in a financial mess with no real leadership, and Brussels is watching it unfold with clenched ￰0￱ Emmanuel Macron’s government has collapsed for the fifth time in under two years, and it’s dragging the economy deeper into ￰1￱ Monday, Prime Minister Sébastien Lecornu resigned after just 27 days in office, becoming the latest casualty of a broken political ￰2￱ couldn’t even get basic support from Macron’s so-called allies, let alone push any new budget or tax ￰3￱ didn’t stop Macron from giving him 48 hours to clean up the wreck, demanding a “stability plan” to fix the ￰4￱ promised to report back ￰5￱ posted on X that he would update Macron “so that he can draw all the necessary conclusions.” But by Wednesday morning, nothing was ￰6￱ claimed the threat of parliament being dissolved was now “more remote,” after a full day of failed meetings with party ￰7￱ said there was some interest in passing a 2026 budget before the end of the year, but that didn’t stop both the far-left and far-right parties from calling for Macron’s resignation and demanding new ￰8￱ loses control while Macron delays decisions Lecornu’s failure is just one part of a much bigger ￰9￱ has been pushing the limits of European Union fiscal rules for years.

It’s now running a budget deficit of 5.8% of GDP in 2024, with public debt climbing to 113% of GDP last ￰10￱ numbers leave France behind only Greece and Italy when it comes to debt in the ￰11￱ bloc has rules, deficits under 3% and debt under 60% of GDP, and France is nowhere near ￰12￱ far, Brussels is pretending to stay out of ￰13￱ officials have put France under the “excessive deficit procedure”, a formal process for countries ignoring the EU’s budget ￰14￱ has until 2029 to sort things out, but no one expects that to ￰15￱ Fatas, an economics professor at INSEAD, said , “Currently the deficit in France is clearly beyond the rules and it’s unclear whether France’s budget will get you within the rules in a short period of time, which is what the rules require.” He said the split in the parliament and the rise of extremist parties make passing any real budget nearly ￰16￱ the financial markets are already ￰17￱ was downgraded by Fitch in September, and Moody’s is expected to follow by the end of ￰18￱ are worried Macron has lost control, and they’re starting to price in more ￰19￱ warn deficit will stay high through 2026 Macron’s next move is still ￰20￱ could appoint another prime minister, dissolve parliament, or (less likely) ￰21￱ whichever route he takes, economists aren’t expecting ￰22￱ Camatte, senior economist at Natixis, said Tuesday, “Whatever the scenarios are we won’t have a proper budget by year-end.” He said the government would likely just roll over the 2025 budget, and the deficit will remain between 5.4% and 5.5% next year, ￰23￱ at Goldman Sachs, things don’t look ￰24￱ Tuesday, they raised their 2025 deficit forecast to 5.5%, citing a lack of political movement and slow economic ￰25￱ also predicted France would start next year with a partial or frozen budget and raised their 2026 deficit forecast by 0.1 percentage point to 5.3%.

Growth? ￰26￱ dropped their projection for 2026 GDP growth to just 0.8%, calling it ￰27￱ smartest crypto minds already read our ￰28￱ in? Join them .