French protests as French economy slumps.
Credit: Nicolas Economou – Shutterstock.
Could a eurozone crisis be about to hit once more? Watching the French economy these days, it makes one wonder.
The continued mentality of austerity measures in the bloc is certainly partly to blame, as well as increased acceptance of a Commission operating beyond its remit, which is having a knock-on effect in a surge towards alternative political movements and populists.
Brussels is keeping a close eye on French public spending as property prices plummet and fears of a sovereign debt crisis loom. France and Germany have always been the powerhouses of the EU economy, but with both currently knee-deep in political uncertainty, a protectionist US government about to come in, and the danger of intensification of the Ukraine war, all eyes are on France and how its economy performs as we move into 2025.
Eurozone crisis looms as French bonds plummet
Michel Barnier’s budget fell flat on its face when he attempted to keep it within EU-mandated spending, sparking outrage in all corners. Other countries in the eurozone are watching in horror as the markets downgraded France’s bonds to the same level as those issued in Greece, leading to France’s borrowing power falling through the floor.
Spain, Portugal, Italy, and Greece eventually kept afloat after the ECB imposed cuts in spending, albeit with Portugal finally breaking the rules and recovering by spending their way out of crisis.
In the eurozone, crisis is contagious, and if 2025 begins in the same economic direction as 2024 is finishing, the question is where economic uncertainty will spread to next.
