France’s Political Crisis and the Massive Debt Behind Government Collapse

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France’s growing debt crisis is at the core of the political turmoil that toppled Prime Minister François Bayrou’s government. Bayrou’s attempt to cut €44 billion ($51 billion) from the budget, including unpopular measures like reducing holidays, triggered a confidence vote that he lost, leading to his resignation.    This video explores:   - Why France’s national debt has soared to over €3.3 trillion (about 116% of GDP)   - The impact of this massive debt on France’s economy and politics   - How borrowing costs and fiscal challenges are shaping government decisions   - What the political fallout means for France’s future stability    #FranceDebt #PoliticalCrisis #FrançoisBayrou #FiscalCrisis #Eurozone #BudgetCuts #DebtCrisis #FrancePolitics #World   🔊 LIKE ➡ SHARE ➡ SUBSCRIBE  For More Updates:  English: https://newsable.asianetnews.com/  Hindi: https://hindi.asianetnews.com/  Malayalam: https://www.asianetnews.com/  Kannada: https://kannada.asianetnews.com/  Tamil: https://tamil.asianetnews.com/  Telugu: https://telugu.asianetnews.com/  Bengali: https://bangla.asianetnews.com/  Like us on Facebook: https://www.facebook.com/AsianetNewsa...  Follow us on Twitter:  https://twitter.com/AsianetNewsEN  Follow us on Instagram: https://www.instagram.com/ann.newsable/  ➡ If you like our video, give us a thumbs up and subscribe to our channel to get the daily dosage of news, entertainment, sports and more.

Transcript

00:00France's growing debt pile was at the heart of the confidence vote that toppled the government

00:08of Prime Minister Francois Beirut. The government fell after Beirut had called the vote to settle a

00:15fight over the budget as he sought 44 billion euros in savings to cut the debt. But his plan,

00:22which includes reducing the number of holidays, proved unpopular. Here is a look at the country's

00:28fiscal situation. France's public debt has steadily risen for decades, fuelled by chronic

00:43budget deficits financed through borrowing on bond markets. The debt grew to 3.3 trillion euros in the

00:50first three months of this year, or over 48,000 euros per French national. The debt amounts to

00:57114 per cent of France's annual gross domestic product, the third highest debt ratio in the

01:04eurozone after Greece and Italy. The debt ratio is almost double the limit of 60 per cent allowed by

01:11the European Union. By comparison, the debt to GDP ratio was at 57.8 per cent in 1995. But financial

01:22crises, the Covid pandemic and high inflation have fuelled its rise. It's not great, but it could be

01:29worse. The avant-garde Institute, a think tank, noted that France's debt ratio was as high as 300 per cent of GDP

01:38between World War I and World War II. Eric Heyer, an economist at the French economic observatory think

01:45tank, told AFP that many countries are above France's 114 per cent debt to GDP ratio.

01:53More debt means more of the country's taxpayer money goes into paying interest to creditors. The growth of

02:07state spending on servicing the debt has been one of the threats cited by the government. The

02:12government's debt burden, or interest payments, totals 53 billion euros in 2025, according to the

02:19medium-term budget plan presented in April. Bayrou has warned that the number will grow to 66 billion

02:27euros in 2026, making it the government's main spending item ahead of education. The consequence

02:35for French people is that we can't do other things, Pierre Moscovici, president of the national audit

02:42body, told news channel LCI. But economists from ATTAC, a French activist group campaigning for

02:49financial justice, and the Copernic Foundation, a left-leaning organization, recently argued in Le

02:55Monde that France's debt isn't as alarming as the government suggests. The government spent just two

03:02per cent of the country's GDP on interest payments last year, the group said in a joint column in Le

03:08Mond newspaper. Other experts, including Haier, also questioned the government's presentation of

03:14interest costs, saying it does not take inflation into account. When prices rise, inflation can reduce

03:21the real burden of debt because the government collects more in taxes and the economy grows,

03:27giving it more room to manoeuvre financially.

03:37Some, including the French government itself, had raised the spectre of a scenario reminiscent of the Greek

03:44debt crisis that rocked the eurozone more than a decade ago. France's long-term borrowing cost jumped to its

03:51highest level since 2011 on 2nd September, as the yield on 30-year government bonds topped 4.5%. The yield on 10-year

04:00sovereign bonds exceeded 3.6% this week, the highest since March, and approaching the same level as Italy, long

04:09seen as a budget laggard in Europe. The rates, however, do not suggest that another Greek-like crisis is in the offing,

04:16said Ipek Oskadeskaya, analyst at Swissquote Bank. The contagion risk remains limited, but France must find a way to

04:25tidy up its finances before gaining investors' confidence back, Oskadeskaya said. There is still strong demand for

04:33French debt. On 4th September, the state raised 7.3 billion euros in a sale of 10-year bonds. The European Central Bank

04:42also provides a safety net by intervening in bond markets to buy government debt, said Christopher

04:48Dembick, a strategist at Pictet Investment Firm. He predicted, however, that ratings agencies will

04:55downgrade France's debt.

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