Previously, Italy was a bad boy of Europe. Now it’s France

Next week, coming into another voice of trust, France will suddenly turn out unexpectedly compared to Italy, a country that was previously known for political upheavals and economic weakness.

Fighting between the main political parties of France and unresolved arguments on the 2026 budget continues, as well as the revolutionary doors of unsuccessful prime ministers in the last couple of years forced economists: “Is France New Italy?”

“Fiscal outlook for France is worse than in Italy, now” Nomura’s European Studies Analysts in the note on Tuesday.

The borrowed pile of France accounted for 113% of its GDP in 2024, and Italy was 135% – but the tables turned when it came to the deficit of the countries during this period. In this metric, Italy’s deficiency was 3.4% of the gross domestic product (GDP), while France – 5.8% of GDP.

Last week, French Prime Minister François Bayer called the voice of confidence for September 8, when he seeks to transfer the controversial budget for 2026, which contains about 44 billion euros (51.3 billion dollars). The goal is to reduce the French budget to 4.6% in 2026, the level is still much higher than the EU deficiency rules.

Bayer was confidence next Monday as an existential moment for France, saying BFMTV on Wednesday that the situation is “serious and urgent”.

If he and his minority government do not win voting Government Less than a year after the short-term administration of Michel Barnier’s predecessor was built up, and another Pety Prime Minister for two years and must be elected President of France Emanuel Macron.

The situation in France puts it in an unfavorable position compared to Italy, which has passed through its own spell on political upheaval and economic uncertainty before the current Prime Minister Georgia Meloni was elected, resulting For the third largest economy of the European Union.

Both France and Italy are within the “excessive deficit procedures” of the European Commission – a mechanism used to return EU member states, in line with the financial rules of the block that the state debt should not exceed 60% of GDP, and the budget deficit should not exceed 3% of GDP.

While italy is expected to succeed in drawing its deficit under control, France does not show the signs of this, laid out.

“However, the France’s deficit trajectory is fragile, and probably the Bayer government’s failure is illustrating the call of France, faced with the content of their costs,” Nomura economists said in an email analysis.

Now France’s neighbors are watching how Bayra has only days to find a budget compromise with a rival After last year’s unconvincing electionTo be in power.

Both sides of the political spectrum stated that they would not support the Centrist government in the vote on Monday after prolonged arguments over the budget and offered costs and taxes. Offer to cut two public holidays in France Also badly descended.

“From the expected drop of the Bire government and the likelihood that the parliament will not lead to the 2026 budget this year, the 2025 budget is likely to be frozen in nominal terms, which means that in 2026, in a percentage of GDP than forecasting the European Commission,” said Nomura. “

The prospect of another likely collapse of the government in France – and constant differences over the 2026 budget – is integral for analysts.

“France, which will already face unprecedented pressure from the financial markets, will present a mournful public spectacle next week,” Mujtaba Rahman commented on Tuesday, head of the director of Eurosia Group.

The Eurasia Group’s basic scenario is that Bayra will lose his vote for trust, and this step Rahman called “a gambling game he never wins.”

“Macron has excluded the new legislative elections-to appoint its fifth prime minister for 21 months, almost certainly from the center and the right coalition,” he said, calling the Secretary of Defense Sebastien Lecorn, Justice Minister Gerald Darmanin and Finance Minister Eric Lombard.

Reflecting a broader financial market nerve around the salon state of French policy, yield 30-year-old France On Tuesday, bond profitability increased above 4.5% – reaching the level, which was last observed in 2008 – before the Wednesday is slightly softened to 4.48%. This week, other major economies also experience increased borrowing costs against wider financial problems.