France's Deepening Fiscal Deficit, Why?

Hygiene issues in classrooms and outdated facilities, combined with record heatwaves and lack of heating, have fueled student anger.

To be precise, they are demanding a public education environment where people can study with dignity. There was significant dissatisfaction with hygiene issues in classrooms and outdated facilities. The French government has pointed to radical left-wing groups as being behind these protests and is responding with a hard line.

It is a dire situation where they cannot even replace a classroom chair for students to study, because they are busy paying interest on the national debt. France's national debt stands at 119% of GDP, and its fiscal deficit is 5.4%, significantly exceeding the European Union (EU) standard of 3%. The French government announced austerity measures worth 65 trillion won (approx. 49 billion USD), but faced strong opposition from the public and opposition parties.

The pension reform plan promoted by French President Emmanuel Macron was postponed until after 2028 due to opposition from 70% of the public.

There was strong public pressure that the government was not collecting enough taxes from large corporations and the wealthy, and instead trying to shift the responsibility to the public. As a result, France's fiscal deficit is not expected to decrease for the foreseeable future.

Financial markets are already sending strong warning signals. The yield on France's 10-year government bonds surged to 4.96%, its highest level in 25 years.

The yield spread with German government bonds widened to 1.5 percentage points, significantly increasing the risk premium on French investments. Government bond yields in neighboring countries like Italy are also showing signs of rising, raising concerns about the potential spread of a financial crisis throughout the Eurozone.