French government on the verge of collapse

According to Sky News, the French government is on the brink of collapse and may also face a debt crisis.

The British news outlet reports that the political deadlock in France could lead, in an unprecedented move since 2020, to the exit of France’s sixth prime minister—at a time when the economy has minimal financial capacity to handle the crisis.

Sky News further examines how France reached this critical point: many of Europe’s largest economies are also grappling with debt problems, and the situation in the United Kingdom is nearly as severe as in France.

Published data show that bond yields—which indicate the level of risk investors accept for holding a country’s debt—are rising across most Western economies. However, in France and the UK, these yields have surged even more, diverging from the trend in other European countries.

This is not the first time France faces a financial crisis. The country has long struggled with excessive spending, and so far, no clear political solution has been seen to control it.

Observers now warn that this crisis could not only risk a resurgence of social unrest—such as the Yellow Vest protests of 2018 and subsequent violence over pension and price reforms—but also trigger broader economic instability.

Bayrou intends to implement a €44 billion budget plan that includes widespread spending cuts and the elimination of two public holidays. However, this plan itself may push him toward leaving the government.

Opposition groups in parliament have refused to support Bayrou or grant a vote of confidence in his proposed plan. Should he be forced to resign, French President Emmanuel Macron will likely have to appoint another replacement. Last year, he already had to part ways with his previously appointed Prime Minister, Michel Barnier.

Opposition parties agree that France’s debt and budget deficit are extremely high, but they disagree on how to reduce them and who should bear the costs.