France's ongoing political instability is raising concerns for Europe's economic future, according to ING's latest analysis. Political turbulence in France, marked by six prime ministers since 2020, reflects deeper structural challenges in balancing rising public debt, ageing populations, and the need for investment and reform.
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Carsten Brzeski, Global Head of Macro at ING, highlights the broader implications: "The number of prime ministers isn't the cause of instability – it's a symptom. It suggests that something in the economy and/or society is in need of repair." The instability, he notes, could push the eurozone's second-largest economy "closer to stagnation," though direct contagion to other eurozone nations is considered unlikely.
Brzeski adds that France's financial fragility serves as a warning for other European states: "For those with deep fiscal pockets, like Germany, France's situation is a warning. It illustrates a future where fiscal stimulus isn't matched by structural reform." The European Commission and ECB are expected to pressure the French government to comply with fiscal rules, or risk rendering them obsolete.
A strong Franco-German partnership is now seen as crucial. Brzeski observes: "Ultimately, Europe requires a robust Franco-German axis to address its numerous challenges and capitalise on what many have termed the 'global euro moment'—or at the very least, to prevent Europe from falling further behind in the global economy."
The ING report also notes that France's political and economic turbulence coincides with a period when Germany seeks to reclaim leadership in Europe, potentially delaying progress on key EU initiatives including the Capital Markets Union, safe assets, and cross-border investment.
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