French Prime Minister Francois Bayrou (L) delivers a normal coverage assertion to MPs at the National Assembly in Paris on January 14, 2025.
Thomas Samson | Afp | Getty Images
Heading into one other vote of confidence subsequent week, France now unexpectedly finds itself unfavorably in contrast to Italy, a rustic beforehand famend for political upheaval and financial frailty.
Continued combating between France’s most important political events and unresolved arguments over the 2026 finances, in addition to a revolving door of failed prime ministers in the final couple of years, have led economists to ask: “Is France the new Italy?”
“The fiscal outlook for France is worse than that of Italy, at present” Nomura’s European analysis analysts stated in a Tuesday observe.
France’s debt pile amounted to 113% of its GDP in 2024, whereas Italy’s was 135% — however the tables turned when it got here to contemplating the nations’ deficit over that interval. On that metric, Italy’s deficit got here to 3.4% of its gross home product (GDP), whereas France’s was 5.8% of its GDP.
French Prime Minister Francois Bayrou final week known as a confidence vote for Sept. 8, as he seeks to go a contentious 2026 finances containing round 44 billion euros ($51.3 billion) in cuts. The purpose is to carry France’s finances deficit down to 4.6% in 2026, a degree nonetheless properly above EU deficit guidelines.
Bayrou has positioned subsequent Monday’s confidence vote as an existential second for France, telling BFMTV on Wednesday that the scenario is “grave and urgent.”
If he and his minority authorities do not win the vote, the government will collapse lower than a yr after his predecessor Michel Barnier’s short-lived administration imploded, and one other PM — the fifth in lower than two years — could have to be chosen by French President Emmanuel Macron.
The scenario in France places it in an unfavorable place in contrast to Italy, which went by way of its personal prolonged spell of political turmoil and financial uncertainty earlier than present Prime Minister Giorgia Meloni was elected in 2022, ushering in a interval of stability for the European Union’s third largest economy.
Italian Prime Minister Giorgia Meloni participates in a gathering with U.S. President Donald Trump, Ukrainian President Volodymyr Zelenskyy and European leaders at the White House on August 18, 2025 in Washington, DC.
Win McNamee | Getty Images
Both France and Italy are beneath the European Commission’s “Excessive Deficit Procedures” — a mechanism used by the Commission to carry EU member states again into line with the bloc’s fiscal guidelines that state public debt should not exceed 60% of GDP, and finances deficits should not exceed 3% of GDP.
While Italy is predicted to make progress in bringing its deficit beneath management, France exhibits no indicators of doing so, Nomura outlined.
“The French deficit trajectory is fragile, however, and the likely toppling of Bayrou’s government illustrates the challenge France faces in reining in its spending,” Nomura economists stated in emailed evaluation.
‘Pitiful, public spectacle’
Now, France’s neighbors are watching as Bayrou has simply days to discover a finances compromise with rival events on the left (the New Popular Front alliance) and proper (National Rally) who really feel, after last year’s inconclusive election, that they need to be in energy.
Both sides of the political spectrum have indicated they won’t assist the centrist authorities in Monday’s confidence vote after extended arguments over the finances and proposed spending cuts and tax rises. The proposal to lower two public holidays in France also went down badly.
“Due to the expected fall of Bayrou’s government and the likelihood that parliament will not pass a 2026 budget this year, the 2025 budget will likely be frozen in nominal terms, which would mean a marginally higher deficit in 2026 as a percentage of GDP than forecast by the European Commission,” Nomura famous, including that debt sustainability in France is “a material concern.”
France’s Prime Minister Francois Bayrou speaks throughout a press convention in Paris on August 25, 2025.
Dimitar Dilkoff | Afp | Getty Images
The prospect of one other doubtless authorities collapse in France — and ongoing disagreement over the 2026 finances — is an unedifying one for analysts.
“France, already facing unprecedented pressure from the financial markets, will present a pitiful, public spectacle next week,” Mujtaba Rahman, managing director of Europe at Eurasia Group, commented in emailed evaluation Tuesday.
Eurasia Group’s base-case situation is that Bayrou will lose the confidence vote, a transfer Rahman described as “a gamble that he was never likely to win.”
“Macron has ruled out a new legislative election — for the time being — and will appoint his fifth Prime Minister in 21 months, almost certainly from within his center and center-right coalition,” he famous, naming Defense Minister Sébastien Lecornu, Justice Minister Gerald Darmanin and Finance Minister Eric Lombard as attainable replacements.
Reflecting wider monetary market nerves round the parlous state of French politics, the yield on France’s 30-year bond yield rose above 4.5% on Tuesday — hitting a degree final seen in 2008 — earlier than frivolously easing to to 4.48% on Wednesday. Other main economies have additionally been experiencing elevated borrowing prices this week amid wider fiscal issues.