France is facing a severe crisis on both political and economic fronts. Below are the key factors:
1. Political crisis
Ultimatum from Marine Le Pen:
- Far-right party leader Marine Le Pen has put significant pressure on Prime Minister Michel Barnier, demanding the government resign within the next 48 hours.
Polarized parliament:
- The deep division between factions in parliament, especially the far-right and the left, has made the passage of economic and budget plans impossible.
2. Alarmingly poor economic situation
Increasing budget deficit:
- The budget deficit for 2024 is projected to reach 6.1% of GDP, far exceeding the target of 5.1%, reflecting a serious imbalance in public finances.
Rising public debt:
- France's public debt is projected to reach 118.5% of GDP by 2028, putting significant pressure on the economy and the country's liquidity.
Credit rating under threat:
- Organizations like Moody’s and Fitch may downgrade France's credit rating, leading to higher borrowing costs and undermining investor confidence.
3. Economic policy deadlock
2025 budget cannot be passed:
- Parliament cannot unify on the 2025 budget plan, increasing the risk of a financial crisis and affecting economic development projects.
ECB lacks the strength to save:
- The European Central Bank (ECB) is expected to implement monetary easing measures in 2025, but the lack of consensus within the French government will reduce the effectiveness of these policies.
4. Risks to political stability
The constitution limits solutions:
- After the unusual elections in June 2024, President Macron cannot dissolve parliament until mid-2025, prolonging the political deadlock.
If this situation is not resolved soon, France will face a twin crisis:
1. Political instability complicates decision-making.
2. Weakening economy, with budget deficits and public debt spiraling out of control, pushing France and the entire EU region into a turbulent phase.
