Global Macro Research
Macro BytesCan France find a way out of its political and fiscal problems?
France’s political gridlock, rising debt and budget battles are making headlines—and meaning the country debt market is looking increasingly like a “periphery” rather than “core” market
Authors
Paul Diggle
Chief Economist
Luke Bartholomew
Deputy Chief Economist
Contributors
Felix Feather, Lizzy Galbraith
Date: 28 Oct 2025
France has been cycling through prime ministers as the government struggles to pass a budget through a divided parliament.
In this episode of the Macro Bytes podcast, Paul Diggle and Luke Bartholomew speak with Lizzy Galbraith and Felix Feather about France’s political and fiscal challenges.
What makes France’s situation distinct from other ageing and indebted Western democracies? And what might a victory for the political extremes in the 2027 presidential election mean for investors?
Some highlights:
What makes France’s situation distinct from other ageing and indebted Western democracies? And what might a victory for the political extremes in the 2027 presidential election mean for investors?
Some highlights:
Political turmoil and budget drama. President Emmanuel Macron’s decision to call early elections last year resulted in a fragmented parliament and frequent changes in leadership. The most recent prime minister resigned after just 26 days, returning only with a fragile agreement to suspend pension reforms.
- Debt and deficit dilemmas. France’s budget deficit is projected at 5.4% of GDP—higher than any other Eurozone country. Government debt stands at 116% of GDP, with public spending remaining persistently high. The European Union has placed France under an ‘excessive deficit procedure’, requiring significant fiscal adjustments.
- Market reactions. Investors are paying close attention. Yields on French government bonds have risen, and the spread with German Bunds is now at its widest in years.
- Deeper challenges. France’s difficulties mirror those of other developed economies: ageing populations, sluggish growth and rising debt. But it’s large state, protest culture, and shared central bank are unique challenges. As a key Eurozone member, France’s fiscal health has an outsized impact on European stability.
- Looking ahead. With the presidential election approaching in 2027 and voter frustration at record levels, the potential for political upheaval is high. Will France elect a populist president? Can the tradition of tactical voting to block far-right candidates endure?
Listen to the latest episode of our Macro Bytes podcast for the full discussion.
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