France placed under special surveillance by Eurogroup

Brussels – The French political crisis ends up at the centre of the informal Eurogroup meeting. The vote of no confidence in the Bayrou government opens up scenarios that are all new and to be defined, of which the French representative, the outgoing Eric Lombard, will be asked to account for. “Certainly the Eurogroup is very interested in understanding how the situation in France may evolve,” European sources confide. “The discussion on the economic situation (on the agenda, ed.) provides an opportunity for the French minister to give explanations.” 

France is the second-largest economy in the eurozone, with a public accounts trend contrary to the common budgetary rules. The spring economic forecasts drawn up by the European Commission indicate that the French deficit/GDP ratio will be well above the reference threshold of 3 per cent: specifically, a ratio of 5.6 per cent this year and 5.7 per cent in 2026 is forecast, thus increasing and not decreasing as the stability pact would like. The same applies to public debt, which is projected at 116 per cent of GDP in 2025 and rising to 118.4 per cent in 2026. According to the Stability Pact reform, France must cut its debt by one percentage point per year. 

Under these conditions, having guarantees of political stability to carry out a programme of economic reforms is crucial for the Eurogroup, which, not surprisingly, will insist on the need for reassurances regarding the country’s agenda. “Information will be sought at this time” on the current situation, the sources continue. There is a process of forming a new executive, and they will first want to understand the timeframe for Paris to have a fully functioning new executive. 

By 15 October each year,  all eurozone countries must submit their draft budget laws to Brussels, accompanied by precise and clear indications to correct macroeconomic imbalances and a plan for structural reforms. France is no exception, and the intention is to see whether, given the situation, a first version of the manoeuvre will be received from Paris in time. “When there will be a government, the government will have to present a draft budget and implement it,” emphasise the EU sources, recalling why the informal Eurogroup on Friday (19 September) will undoubtedly be the subject of requests from the body’s president, Paschal Donohoe, and the finance ministers who will want to ask questions about it.