France’s election results expected to inhibit progress on growth reforms, fiscal consolidation, and EU policy agenda

At Extreme Investor Network, we strive to provide our readers with unique and valuable insights into the world of trading, the stock market, and Wall Street. Today, we are diving into the economic challenges facing France, specifically the steady rise in public debt that remains a significant concern for the country.

France’s stretched public finances and high political polarisation have limited the government’s ability to maneuver policy effectively. This poses risks that may be reinforced by the outcomes of the parliamentary elections. Both political spectrums in France have proposed expansionary fiscal policies, which could hinder efforts to reduce public debt in the coming years.

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With a fiscal deficit of 5.5% of GDP in 2023 and a public debt stock of 110.6% of GDP, any new government will have limited fiscal space to work with. The 2024 stability program’s budget deficit target of below 3% of GDP by 2027 is considered outdated and unrealistic given the current economic challenges.

A potential hung parliament after the second round of elections could limit fiscal slippage but could also halt reform momentum in France. The lack of an absolute majority for either the National Rally or the New Popular Front could lead to political stasis, complicating the budget-adoption process for 2025. However, this scenario may reduce the risks associated with expansionary fiscal policies proposed by the political parties.

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As we continue to monitor the developments in France and their impact on the economy, it is crucial for investors to stay informed and adapt their strategies accordingly. Stay tuned to Extreme Investor Network for more insights and analysis on the ever-evolving world of finance and trading.

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