France's Deepening Crisis Puts Europe On CONTAGION Alert

The comments from Nigel Green come as France counts the cost of its worst civil unrest in years, with around 550,000 people taking to the streets over the weekend and almost 2,400 arrests, just ahead of a pivotal National Assembly vote on the country's 2027 budget.

Prime Minister Sebastien Lecornu's minority government is seeking EUR 54 billion of savings to bring the deficit down to 5% of GDP from 5.4% this year. Budget fights have already brought down two of his recent predecessors.

France hasn't run a budget surplus since 1974. Public debt stands at around 119% of GDP and is forecast to reach 122% next year.

The yield on 10-year French government debt neared 5% earlier this month, its highest since 2002, while the gap over German Bunds hit its widest since the eurozone debt crisis.

When French bonds sold off sharply at the start of October, Italian, Belgian and Greek bonds fell with them, and the euro dropped below $1.12, its weakest level in 17 months.

French debt is also widely held overseas, with Japanese institutions alone holding around $145 billion.

France's troubles are landing at the start of a packed run of European votes.

Spain holds a snap general election on 29 November, France chooses a president next April and May with Marine Le Pen leading many polls, and Italy, Poland, Greece and Finland are all due at the ballot box in 2027, alongside five German state elections.

The European Central Bank has so far signalled it won't step in simply because spreads are wide, seeing the moves as driven by France's own fundamentals.

He remains optimistic about where this leads.

Research AI and tech stocks at Investorideas free stock directory
Learn how to be a featured AI stock
>