Nerves jangle in Europe as France heads into another political crisis

Tensions are likely to escalate in Brussels this week, with another political collapse in France, which makes the process of controlling the financial conditions that the country needs strongly suspended in the scale.

The second largest economy in the eurozone has violated the European Commission’s bases about the budget deficit and debt boundaries, and successive prime ministers tried to solve the problem through proposed reforms, reduce spending and increase taxes. They were expelled over and over again.

The last martyr in the continuous political predicament in Paris – the fifth prime minister of France in less than two years – is Sebastian Lecorno, who announced his resignation on Monday after only 27 days in his position.

His decision came to step down after his failure to obtain political competitors (And even the allies on the right of the center) To support his new government. No plans for spending or taxes have not yet been announced, although the differences over the budget between the government and the competing parties were a retreat from previous administrations.

In reference to that he is desperate to avoid the loss of another prime minister, French President Emmanuel Macron gave Monday evening Lecorno 48 hours to develop a “stability of the country” and a way to get out of political stalemate.

Lecorno wrote on X that he would report to the president on Wednesday evening on any possible penetration “so that he can extract all the necessary conclusions.”

On Wednesday morning, Lecorno said that the possibility of parliament resolving as a result of the crisis appears “further” after a day of talks with the various political parties, noting that there is willing to pass the 2026 budget before the end of the year.

However, it remains to see whether any serious cooperation between the competing parties will be achieved, as those in the far left and the right to smell the blood earlier this week, demanding the resignation of Macron and the holding of a new parliamentary and/or presidential elections.

France needs to close the budget deficit by 5.8% of GDP in 2024, and treat a large debt pile of 113% of GDP last year. This puts France behind Greece and Italy only in terms of The largest piles of the European Union debts.

Both levels are much higher than the rules of the European Union, which demand that the deficit not exceeding the member countries does not exceed 3% of the gross domestic product, while the public debt should not exceed 60% of the economic output.

France has been placed under European Union “Excessive deficit” It is applied to member states that do not meet the rules stipulated in the “Stability and Growth Charter”.“

In front of her until 2029 to arrange her homeBut there is no indication that France will be able to fulfill its obligations any time soon.

CNBC asked the European Commission to comment on the recent crisis and awaiting a response.

“The question is how to adhere to these people [EU] “It is clear that the deficit in France currently goes beyond the rules, and it is unclear whether France’s budget will make you among the rules in a short period of time, which is required by the rules,” Antonio Fatas, professor of economics at ISAD College, told CNBC on Tuesday.

He said in an interview with the “Early Europe” program on CNBC: “Given the composition of Parliament, and given the division, and given the opinions of the extremist right and the extreme left, this means that it seems very difficult to achieve a budget that corresponds to these rules,” he said in an interview with the “Early Europe” program on CNBC.

Although the European Union may be ready to postpone the crisis at the present time, investors may not be ready to overlook France’s lack of financial discipline. The country had already suffered from reducing its credit rating by Fitch last month. It is widely expected to follow Moodyz at the end of October.