Will Jones
Dr Will Jones is editor of the Daily Sceptic. He has a PhD in political philosophy, an MA in ethics, a BSc in mathematics and a diploma in theology. He lives in Leamington Spa with his wife and two children.
Is France about to trigger the next financial crash? That’s the question Matthew Lynn is asking in the Spectator as François Bayrou’s government looks set to fall after failing to pass yet another budget. Here’s an excerpt.
Its debts are out of control. There is very little space left to raise taxes any further. And the political establishment can’t agree on anything apart from postponing the whole issue for another year or two. It is a description that could apply to plenty of countries, and not least the UK. But right now, it is one that applies most acutely to France. With yet another government about to fall, and the CAC-40 stock market index falling sharply, the real question is this: will Paris be the centre of the next financial crash?
The French Prime Minister François Bayrou yesterday took the plucky, if foolish, decision to recall parliament on September 8th for a vote of confidence. He is struggling to pass a budget that would put in place some modest controls on public spending – not cuts, of course, but a slowdown in the rate of increase – as well as some symbolic gestures such as scrapping two public holidays. It seems highly likely that Bayrou will lose his vote of confidence. As such, the government will fall and President Emmanuel Macron will have to look for another PM – or else call fresh elections.
It is hardly surprising that investors are growing increasingly nervous about France’s debt. The deficit is forecast to exceed five per cent of GDP this year and may well go over six per cent. Economic growth has ground to a halt. The tax rises imposed last year have done nothing to fix the hole in the nation’s finances, while the debt-to-GDP ratio has climbed over 110 per cent and state spending now accounts for 58 per cent of total output. Lots of European countries are addicted to state spending, but France is leading the way. It already has the third largest stock of outstanding debt in the world, after the far larger American and Japanese economies, and yet it keeps adding to it.
With shares in major French banks down by up to seven per cent, Paris is looking increasingly like the trigger for the next financial crash, says Lynn.
Worth reading in full.
Stop Press: The German welfare state is no longer financially sustainable, Chancellor Friedrich Merz has said.
Stop Press 2: Britain’s long-term borrowing costs are nearing their highest level since 1998 as Rachel Reeves fails to balance the public finances.
This article was originally published by the Daily Sceptic.
