French political and fiscal instability turns into a systemic risk for Europe
France, the new epicenter of Europe’s fragilities
French public debt has exceeded 110% of GDP, with a deficit still above 5% and chronic political instabilityundermining credible reforms. This scenario, flagged by rating agencies, exposes the entire Eurozone to growing risks.
Markets cautious but nervous
Spreads remain low, but France’s weight – over 20% of Eurozone debt – increases vulnerability. More than half of its bonds are held by foreign investors, making the country more fragile than Italy or Spain.
The ECB’s difficult choices
The European Central Bank faces a dilemma: cut rates to avoid a general tightening, or deploy the Transmission Protection Instrument (TPI) to contain contagion limited to France. But the TPI cannot mask domestic political mistakes.
A risk beyond borders
The so-called “France risk” is no longer just about Paris. As Unimpresa highlights, the Eurozone’s second-largest economy jeopardizes collective stability. Italy, after efforts in fiscal discipline, cannot afford France’s weakness to derail Europe’s balance.