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France's crisis: threat to Germany's economy and stability!
Political crisis in France alarms the German economy: stability is required, uncertainties are increasing at EU level.
France's crisis: threat to Germany's economy and stability!
The current political and economic crisis in France is having an alarming effect on the German economy. Dirk Jandura, President of the Federal Association of Wholesale, Foreign Trade and Services (BGA), emphasizes France's outstanding role as Germany's most important partner in Europe. The current situation in France, which is perceived as deeply divided, provides breeding ground for extreme parties.
Prime Minister François Bayrou is at a critical moment as he fights for the survival of his minority government. A crucial confidence vote will take place in Parliament on September 8th, which has come into focus due to planned budget cuts. The three main opposition parties have announced that they will withhold their support, increasing the likelihood of the government's fall.
Market-shaking impact
The yield on French government bonds has risen to 3.51%, higher than that of Greece. Investors are demanding higher risk premiums due to the budget crisis. Jandura describes France's high level of debt as a risk, but does not yet see an immediate euro crisis. In connection with the rising yields, the gap between French and German federal bonds has also widened.
Budget crisis and austerity measures
Prime Minister Bayrou is forced to implement savings of 43.8 billion euros in his 2025 budget, with 80% coming from spending cuts and 20% from tax increases. The goal is to reduce the budget deficit from 5.8% of GDP in 2024.
Analysts warn that there is no clear way out of the political crisis. If Bayrou loses the no-confidence vote, it could lead to a new government formation or new elections. A clear majority for one of the political camps cannot be seen in the current surveys.
The political unrest in France is leading to greater uncertainty at the European level, particularly in free trade negotiations and reducing bureaucracy. While Jandura currently sees no immediate impact on wholesale and foreign trade or economic relations between Germany and France, the situation remains tense and requires careful monitoring.
In summary, the crisis in France is affecting not only local politics but also the international economic landscape. At a time when stability is required, the EU faces significant challenges, particularly in terms of political uncertainty.
For more information on the economic impact of the political crisis in France, visit n-tv and Euractiv.