France on a Hot Plate.. The Confidence Vote for the Government Reflects a Crushing Political and Economic Crisis

France is preparing for a fateful event on Monday, which involves the National Assembly voting on granting confidence to Prime Minister François Bayrou's government, amid a tense political climate and an exhausted economy under the weight of an ambitious austerity plan aimed at addressing a financial deficit exceeding 142 billion euros.

The government is trying to pull France out of the tunnel of the financial crisis through a plan that includes cutting public spending by 44 billion euros and increasing taxes. However, these measures threaten to weaken citizens' purchasing power, shrink the gains of the "middle class, which has already collapsed, as well as the gains of the working class," which will negatively affect the quality of essential services such as health and education.

Although the apparent issue is a financial crisis, observers believe that the root of the problem in France lies in the "political structure." The results of the second round of the early legislative elections held on July 7, 2024, were "contrary to opinion polls," following the dissolution of the National Assembly in June 2024 after the overwhelming victory of the far-right in the European elections.

This political division hinders government work and previously led to the downfall of Michel Barnier's government just three months after he was appointed in late 2024, and it is likely that Bayrou's government will face the same fate on Monday.

Concerns deepen with a look at the ownership of French public debt, which has risen to record levels of about 114% of GDP, equivalent to 3 trillion and 300 billion euros. According to data from "Barclays and the U.S. Treasury Department," foreign investors own about 56% of this total debt, a percentage that exceeds that of major economies such as Italy (28%), the United States (30%), Spain (40%), and Germany (45%).

The danger lies in the fact that this high percentage "may mean that settling French borrowing costs could take longer," and estimates suggest that the actual percentage of foreign investors may be higher, as "French investment firms that own less than 50% of the debts are currently only financial services companies, but the true ownership of those investments is foreign."

This situation "will raise concerns in the European Union." Last week, European Central Bank President Christine Lagarde commented, saying: "France is not in a position that requires International Monetary Fund intervention at this time, but any risk of a government collapse in the eurozone is concerning." Lagarde emphasized that "fiscal discipline remains necessary in France," noting that she is closely monitoring the situation of French bond spreads.

This plan comes as part of the government's efforts to balance reducing the deficit and stimulating growth, amid warnings from economists that "any delay in financial reforms could lead to greater costs in the long term, including rising interest rates on government debt."

In conclusion, the fate of the government, whether it gains confidence or is ousted, remains an indicator of the instability facing this key country in the eurozone. The presence of "a government with a fragile majority and promises of austerity reforms met with sharp rejection, along with popular pressures threatening to paralyze the country in the coming days," puts the future of the French economy at stake and paints a grim picture that investors and the world watch with concern.