France faces the risk of a financial crisis after Emmanuel Macron called a snap election, warned Finance Minister Bruno Le Maire. He expressed concerns as the premium France must pay on its sovereign debt compared to Germany reached its highest level since 2017.
Le Maire highlighted that France now pays more than Portugal to secure its funds. Meanwhile, the benchmark CAC 40 stock index dropped another 2.3% today, falling below its closing price at the end of 2023 and erasing all gains for the year.
The stock market has fallen nearly 6% this week, marking its worst period since March 2022 when markets were disrupted by Vladimir Putin’s invasion of Ukraine.
Bonds and stocks have plunged since Macron’s decision to call a snap poll on Sunday, following a significant defeat to Marine Le Pen’s far-right National Rally in the European Parliament elections.
France’s leftwing parties are set to reveal their political manifesto today, aiming to challenge the far-right’s National Rally, which currently leads in the polls for the upcoming snap parliamentary elections.
When asked on Franceinfo radio whether the current political situation could lead to a financial crisis, Le Maire responded, “Yes.”
In addition, inflation in France rose more than expected in May, driven by higher food and energy prices. The consumer price index increased by 2.3% in May, up from 2.2% in April, according to the National Insee statistics office, contrary to economists’ expectations of unchanged inflation.
