{"id":271054,"date":"2025-07-18T03:55:13","date_gmt":"2025-07-18T03:55:13","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/271054\/"},"modified":"2025-07-18T03:55:13","modified_gmt":"2025-07-18T03:55:13","slug":"frances-budget-bombshell-is-a-wake-up-call-for-europe-as-it-veers-toward-bankruptcy-politico","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/271054\/","title":{"rendered":"France\u2019s budget bombshell is a wake-up call for Europe as it veers toward bankruptcy \u2013 POLITICO"},"content":{"rendered":"

\u201cThis will leave increasingly little fiscal space for benefits targeted at mitigating poverty, insuring against income shocks, and supporting labour-market reallocation,\u201d the OECD warned.\u00a0<\/p>\n

In many cases, the most pressing issue is the cost of the state pension system: the U.K.\u2019s Office for Budget Responsibility\u00a0said<\/a>\u00a0this month that by the early 2070s, it will be consuming 7.7 percent of GDP, up from 5 percent today (and only 2 percent back in 1950). More broadly, the European Commission\u2019s\u00a0last effort<\/a>\u00a0at quantifying the problem in 2021 said the overall cost of ageing \u2014 including pension, health and care costs \u2014 will rise from 24 percent of GDP in 2019 to 25.9 percent by 2070.\u00a0<\/p>\n

Army dreamers vs. bond vigilantes<\/strong><\/p>\n

And at the same time as solving that problem, governments also have to finance a\u00a0huge upgrade<\/a>\u00a0to Europe’s rusty armed forces, to deal with the renewed threat from the east.\u00a0So far, Germany<\/a>,\u00a0the U.K.<\/a>\u00a0and\u00a0France<\/a>\u00a0have all accepted they will need to shell out handsomely for that, but Spanish Prime Minister Pedro Sanchez has\u00a0balked<\/a>\u00a0at the challenge.<\/p>\n

Credit agency KBRA estimates that the new pledge by NATO states to raise defense spending will widen government deficits in the EU by between 1.3-2.8 percent of GDP, depending on how quickly and on what the money is spent.\u00a0<\/p>\n

\"\"Only last week, across the Channel, U.K. Prime Minister Keir Starmer was forced by a backbench revolt of his own MPs to\u00a0abandon welfare cuts\u00a0he deemed necessary. | Pool photo by Andy Rain\/EPA<\/p>\n

\u201cI think the market is much more sensitive now to fiscal policy and the fiscal trajectory of sovereign debt and deficits,\u201d said Ken Egan, senior director for sovereign debt at the rating agency.\u00a0<\/p>\n

That\u2019s particularly true of the U.K., where a combination of high inflation and a concentration of debt in the hands of flighty finance industry investors, like hedge funds, has made the country more exposed to jumps in borrowing costs.\u00a0The yield on the U.K.\u2019s\u00a030-year debt<\/a>\u00a0has pushed well above the level seen in 2022, when then-prime minister Liz Truss\u2019s disastrous “mini-budget” roiled markets. That \u201csuggests that investors remain concerned about the inability to reduce deficits and the debt,\u201d said Guillermo Felices, global investment strategist at asset management firm PGIM Fixed Income.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"\u201cThis will leave increasingly little fiscal space for benefits targeted at mitigating poverty, insuring against income shocks, and…\n","protected":false},"author":2,"featured_media":271055,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5309],"tags":[3420,1194,2825,68102,2000,299,20327,76456,36,37,1945,1824,2122,807,28649,5338,617,104,15,49],"class_list":{"0":"post-271054","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-france","8":"tag-bonds","9":"tag-budget","10":"tag-debt","11":"tag-demographics","12":"tag-eu","13":"tag-europe","14":"tag-eurozone","15":"tag-fiscal-measures","16":"tag-france","17":"tag-francois-bayrou","18":"tag-friedrich-merz","19":"tag-germany","20":"tag-japan","21":"tag-keir-starmer","22":"tag-national-budgets","23":"tag-pedro-sanchez","24":"tag-pensions","25":"tag-spain","26":"tag-united-kingdom","27":"tag-united-states"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114872223274930241","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/271054","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=271054"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/271054\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/271055"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=271054"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=271054"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=271054"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}