- Paul Krugman says France is on a fiscally unsustainable path, with rising interest costs on its debt and large budget deficits raising its debt-to-GDP ratio.
- Krugman argues France has crossed from too big to fail to too big to save, making an ECB bailout extremely expensive and politically contentious.
- Trichet says French politicians must reach a compromise on the deficit, and that credibility is a condition for activating the ECB's Transmission Protection Instrument.
- Prime Minister Sébastien Lecornu is struggling to pass a contentious 2027 budget that seeks tens of billions of dollars in fiscal consolidation, while student protests continue.
Quotes
“France may have crossed the line from too big to fail to too big to save.”
“The ball is in the camp of the French government and parliament, and they have hard work to do.”
“fiscally unsustainable path”