France’s challenges mount over ballooning debt

Political divisions suggest Paris’ proposed budget faces an uphill battle to pass. France’s challenges mounted as concerns over its ballooning debt weighed on economic activity and reverberated across Europe. Economists argue planned government spending cuts do not go far enough and political divisions — far-left and far-right parties instead want the European Central Bank to buy up or even cancel French debt — suggest Paris’ proposed budget faces an uphill battle to pass. Political uncertainty is hampering business investment, France’s biggest business group has warned, while anxious consumers are holding off on purchases. The challenges are manifold: “Rising debt levels, persistent fiscal slippage, elevated borrowing costs, and political uncertainty [will] increasingly test the credibility of France’s fiscal strategy ahead of the 2027 presidential election,” a Morningstar analyst wrote in a note to clients.