Com fiscal frágil e populismo avançando, a França está com cara de Grécia

France, once again, appears poised to explode. Seven months out from an election that could see incumbent President Emmanuel Macron's government toppled and right-wing Marine Le Pen emerge victorious, the country is grappling with soaring interest rates on its public debt while student protests rage over the decay of the public education system.

Since taking office in 2017, Macron has implemented reforms to attract private investment and streamline labor rules. However, sluggish GDP growth and a ballooning public debt – now edging closer to 120% of GDP – have put pressure on the country's fiscal stability. Coupled with political uncertainty, this has driven up yields on French 10-year bonds to a five-year high of 5%, surpassing the rates paid today on Greek bonds, which are currently at 4.4%.

The French Treasury holds over $1 trillion in debt maturing by 2030 and plans to sell a record $380 billion in securities in the coming year, according to the Wall Street Journal. A CNBC article quoted a Carmignac fund manager as saying that France has been a "free rider" in Europe for years, avoiding its evident fiscal excesses.

Krugman, an economist known for his insights into global crises, warns that France's fiscal trajectory is unsustainable, as the debt-to-GDP ratio is already high and the government continues to increase it by running large budget deficits, even without emergencies like wars or severe recessions. The economist notes that the French population is aging, which will put further strain on the pension system as retirement costs rise faster than revenues.

Macron recently proposed a pension reform to gradually increase the retirement age to 64, but opposition candidates are already calling for a rollback of this new rule. Krugman argues that France's generous early retirement system, with a minimum retirement age of 62 compared to 67 in countries like Denmark and the US, is not sustainable, especially when considering the average life expectancy of 87 years in France, two years longer than in the US.