The French National Assembly votes Wednesday on France’s contribution to the EU budget, as Finance Minister Roland Lescure warns that rising borrowing costs signal trouble. In Paris, the two facts now sit side by side: a record debt trajectory and a bill for Brussels.
"We have the confidence of the markets in the sense that we have no trouble issuing debt," Lescure told Franceinfo radio. "But it costs us more, and that is an alarm signal we all need to take on board." France's 10-year government bond yield has neared five percent in recent weeks. As investor worries mount, Paris must offer higher interest rates on every bond it issues.
The Numbers
French public debt is projected to reach a record 121.7 percent of GDP in 2027 under the government's budget proposal, up from 119 percent at the end of June. The budget aims to bring the deficit down to five percent of GDP next year, from an estimated 5.4 percent for 2026.
The government doesn't command a majority in the lower house of parliament. Passing the budget will be an uphill struggle. President Emmanuel Macron, a centrist former investment banker, can't seek a new term, and a presidential election is approaching.
Who Decided?
Bank of France Governor Emmanuel Moulin, speaking in Bangkok, urged French political leaders to "shoulder their responsibilities" and ensure adoption of a budget. His remark appeared to refer to a constitutional provision that allows governments to force legislation through without a vote. That would let the central bank governor point to a mechanism that bypasses elected deputies entirely.
EU economy commissioner Valdis Dombrovskis told AFP on the sidelines of the IMF-World Bank meetings in Bangkok that "it's important to have clarity about the budget" in France. IMF chief Kristalina Georgieva warned it "would take time" before French debt could fall to levels "that are providing confidence -- full confidence -- to people and to the investor community." French voters hear a commissioner and an IMF chief discuss their budget from Thailand.
The Brussels Contribution
Front-running presidential candidate Marine Le Pen acknowledged the "gigantic, enormous debt ... that could become uncontrollable" in an interview with The Financial Times published Wednesday. She wants to impose 140 billion euros in cost-savings, partly by slashing France's contribution to the EU budget. "We know there will be a tough debate, even a trial of strength" with Brussels, she told the paper.
The timing is hard to miss. POLITICO's Brussels Playbook reported that Le Pen is in Brussels for the Patriots for Europe's pre-Council meeting, where she has a press conference at 7:30 p.m. The National Assembly votes Wednesday on the size of France's EU contribution. Every euro sent north is unavailable to address a deficit that the finance minister himself calls an alarm.
The Cost to Our People
The street is already restless. AFP's headlines reported that 480,000 French students joined a new day of school protests. The base reporting doesn't say what drove them out, but the number shows how pressure is building on a government short of votes and money.
The question for French voters is plain. A country borrowing at nearly five percent, with debt heading to 121.7 percent of GDP, still writes cheques to Brussels. The Assembly will decide Wednesday who set that contribution, who approves it and who pays for it. Whether lawmakers pass the budget by vote or use a constitutional shortcut remains an open question hanging over Paris.