Governmental crisis looms in France as financial concerns escalate

France, a country known for its rich culture and economic might, is currently grappling with significant economic issues. The country's state expenditure is among the highest in Europe, and its yield on ten-year government bonds is barely below that of Italy.

These economic woes have been compounded by the lack of a majority for reforms in parliament, making it unrealistic for France to reduce its budget deficit from the current 5.8 percent to 4.6 percent of GDP next year, according to Jörg Krämer, chief economist at Commerzbank.

Prime Minister Bayrou's plan to achieve economic growth by abolishing two public holidays has met with resistance from a majority of the population, further alienating them from his austerity plans. The Prime Minister had warned of worsening debt problems and negative economic consequences if France did not tackle its debt across party lines and implement an austerity budget.

However, there is currently no majority in parliament for the implementation of this austerity budget. As a result, France has considered immediate measures to reduce its high public debt, including proposed savings of about 44 billion euros. Some proposals, such as cutting two public holidays, have faced resistance, and the government is also considering concessions like higher taxes on large companies and the super-rich to gain parliamentary support for a budget that addresses the debt issue.

Despite the looming government overthrow, experts do not expect a debt crisis in France. Christine Lagarde, President of the European Central Bank (ECB), stated that every impending government overthrow in a country of the eurozone is worrying, but she does not expect France to request help from the International Monetary Fund (IMF) for the repair of its finances.

According to Goldman Sachs, the greatest economic challenge for France is to stabilize its public debt, which has recently risen to approximately 114% of its gross domestic product, making it the EU country with the third highest debt ratio, following Greece and Italy. The bank also assesses that France must urgently resume structural reforms to boost growth.

France has the highest debt mountain in the eurozone, with around 3,300 billion euros in absolute terms. The country is paying higher interest rates for new government bonds than Greece and almost as much as Italy due to political stalemate and lack of austerity efforts.

In August, French Prime Minister François Bayrou announced that he would put a vote of confidence in parliament regarding the austerity budget with planned cuts of 43.8 billion euros. All signs point to Prime Minister Bayrou losing the vote of confidence on Monday afternoon.

These economic challenges underscore the need for France to find a political solution that can garner support for much-needed reforms and austerity measures to stabilize its public debt and boost economic growth.