As analysts had predicted, Fitch has made a new downgrading of the French economy due to increased debt and political instability. Dw resolution. It is the worst assessment ever made for the France: Friday night (after the Wall Street closure in the US) the house Fitch He announced that it is degrading the debt of the French economy from AA- to A+.

The reason: the fiscal uncertainty, but also the political instability that even impede the preparation of the state budget. Fitch refers to Prime Minister François Bairou’s recent resignation and the “growing polarization” observed in French politics.

On the basis of all this, the US House concludes, it is unlikely that the necessary measures to consolidate public finances will be implemented and reduced state budget deficit below 3% by 2029, according to the declared objectives of the French government.

In a first- rather embarrassing- reaction, French Finance Minister Eric Lobard states that he is “taking into account” Fitch’s announcements and that new Prime Minister Sebastian Lekornou continues consultations in order to make a capable majority for the approval of the budget.

The biggest debt in the eurozone

It was no surprise, nor could one expect anything different if it considering the developments of recent months and years: France, second -largest eurozone economy, has the third largest debt as a percentage of gross national product (GDP), with 114.1%, while the state deficit is 5.8%.

Indeed, the rate of debt is estimated to reach 120% by 2030. It should be noted that unfortunately Greece still holds the first with 152.5% (which is certainly due to the shrinking of Greek GDP in times of crisis, at the expense of cuts).

If we make comparisons to absolute sizes, we will find that France’s public debt is the largest in the eurozone, as it has been launched in the inconceivable amount of 3.34 trillion euros.

This is one reason that the yield on the 10 -year French bond now reaches 3.5%, ie higher levels since 2009. A corresponding record records the 30 -year bond, with a yield of over 4.5%.

Simply put: France is increasingly difficult to find lenders who will refinance its debts unless it offers higher interest rates to entice them. But today it pays for interest -bearing more than it has for education.

Comparisons with Greece

Some analysts wonder if we are ahead of a new debt crisis, such as the one that broke out in 2010. Most insist that “France is not Greece”. After all, it is assumed that the eurozone is now better prepared to face a fiscal derailment compared to 2010.

Where there is a comparison with Greece in the crisis is the huge public sector, which today reaches 57% of the French economy. Fitch had pointed to it in previous evaluations of the French economy. Prime Minister François Bairou also tried to correct this, but failed.

The new degradation of the debtor of the French economy is expected to have wider consequences for the European Union, in particular in the face of critical consultations on the new perennial fiscal framework and funding of defense spending.

Countries such as Germany, the Netherlands and Denmark will do everything they can to preserve the excellent AAA evaluation as “pupils” they still maintain to this day. This means that one strongly strengthened the strong mentality of budgetary temperament, which does not favor initiatives for debt, as demanded by the economically weaker countries of the European South.