The French government is close to collapse for the second time this year, sparking investor worries over a potential intervention by the International Monetary Fund.
Paris’ borrowing costs spiked as Prime Minister François Bayrou bet the house on a confidence vote, set for early September, over austerity plans to reduce government borrowing — an election he has little chance of winning.
Bayrou has signalled a willingness to negotiate with party leaders from his coalition, to a point. The only non-negotiable, he said, is “to get out of the path of over-indebtedness,” he said in a television interview. The continent has never been a model for fiscal responsibility, but France (like the US) both carries high debt and runs big budget deficits, even with its economy growing modestly well over the past few years (also like the US). French business leaders, meanwhile, are already trying to head off any talk of tax increases.
