France's fiscal mess has only one true solution
France’s crisis keeps getting more extreme, spilling over the weekend into broader protests that precipitated hundreds of millions of euros in damage and nearly 2,400 arrests. The country’s leaders are rightly focused on curtailing the violence. Yet as they seek ways to placate a frustrated populace, they must be careful not to make a bad fiscal situation worse. It’s hard to overstate how dire…
France finds itself in a fiscal crisis that threatens to spiral out of control, with protests erupting across the country and causing significant damage and arrests. The government faces the challenge of addressing this issue without exacerbating the situation. France's economic predicament has worsened as investors have driven up the yield on its 10-year bonds to nearly 5%.
If borrowing costs remain elevated, the government may struggle to maintain its debt at its current level of 120% of GDP, which is one of the highest in Europe. Stabilizing the sovereign debt would require a primary budget surplus of up to 2% of GDP, a target France hasn't met since the 1970s. The political obstacles to achieving this level of deficit reduction, estimated to be around €125 billion by 2032, are immense.
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- France's fiscal mess has only one true solution koreatimes.co.kr
