(9 December 2024 – France) President Emmanuel Macron is searching for a new Prime Minister following a vote of no confidence as serious domestic political disputes in France and Germany test the bounds that hold the European Union (EU) together.
The new French PM is tasked with guiding a 2025 budget through a deeply divided parliament with no certain end to the political instability in sight as a US-style shutdown was averted. The political instability could drive up French interest rates, exacerbating the debt issue and causing major flow on effects for the steadily depreciating Euro.
France is under pressure from the European Union’s executive body to reduce its enormous debt load. The country’s deficit is estimated to reach six percent of gross domestic product (GDP) this year and could expand to seven percent in 2025 without significant recalibration.
Germany will hold a snap general election in February 2025 after its riven coalition government collapsed.
“At this key moment in geopolitics, leadership in the EU is sorely missing. The bloc is beginning to feel rudderless, with the rise of more autocratic, Russia-sympathising leaders in Hungary, Slovakia and Romania and French and German focus weakened and distracted” stated BBC Europe Editor, Katya Adler.
“The recent developments in France only compound the headwinds for the nation and the European Union in general” said DoubleLine Capital Portfolio Manager, Bill Campbell.
“We think France is facing a toxic mix of weak economic growth and political instability that prevents debt consolidation and discourages investment” said Mizuho International Strategist, Evelyne Gomez-Liechti.