Washington Post calls France the sick man of Europe as bond yields top 5%
French 10-year government bond yields have risen above 5% after a recent sell-off, and the Washington Post argues that France's budget troubles could spread across the euro zone.
The bond market and the verdict
The Washington Post, in an editorial published on Friday, argues that France has replaced Greece and Italy as the "sick man of Europe". The paper points to a recent sell-off in French government bonds that pushed yields on 10-year bonds above 5%, a level not seen in years. The editorial calls the sell-off a symptom of a wider problem and warns that France's budget troubles risk spreading economic turmoil across the entire euro zone. Investors are concerned, the paper says, because the fiscal outlook looks increasingly grim and the divided political system appears unable to stop the state from sliding into insolvency.
France is now the sick man of Europe, grappling with a combination of astronomical welfare spending, rising deficits and an approaching "debt bomb".
Deficit, debt and borrowing
France's budget deficit currently exceeds 5% of GDP, well above the European Union limit of 3%. Public debt has reached almost 3.6 trillion dollars, equal to 119% of GDP, and the government plans to borrow a further 386 billion dollars next year. The editorial says France devotes over 57% of GDP to the public sector, a higher share than other European countries that also spend generously on social programmes. The paper's core complaint is that the country spends more to maintain its welfare network and government bureaucracy than it collects in taxes.
- Public debt
- 119 % of GDP
- Public sector spending (over 57%)
- 57 % of GDP
- Budget deficit (more than 5%)
- 5 % of GDP
France's problem is simple: the country spends more on maintaining its bloated network of social safety nets and a growing government bureaucracy than it collects in taxes.
Protests and political deadlock
Street protests in French cities have been under way since the end of September, and demonstrators are demanding more spending on education. The Post recalls that Emmanuel Macron, campaigning in the 2017 presidential election, promised to break the political impasse and put public finances in order, but did not succeed. Prime Minister Sebastien Lecornu postponed the unpopular pension reform in 2025 until after elections, in order to survive a no-confidence vote. The editorial argues that whenever political leaders try even slightly to trim the welfare structure, its largest beneficiaries take to the streets, in line with the tradition of the French Revolution.
- Macron promises to break the political impasse and order public finances, which the Post says he did not achieve
- Lecornu postpones the unpopular pension reform until after elections to survive a no-confidence vote
- Street protests begin, with demonstrators demanding more spending on education
- The Washington Post editorial calls France the sick man of Europe
What the Post says comes next
The editorial says the leading candidates in the upcoming presidential election do not inspire much confidence among investors. It also says the divided political system appears unable to stop the state from slipping into insolvency. The paper states that the political will to address the causes of the situation is lacking. Its central warning is that France's budget troubles could spread across the entire euro zone.
