Public finances would be threatened by the dissolution of the National Assembly

Emmanuel Macron's decision to dissolve the National Assembly plunges France into political uncertainty. If the consequences on the political landscape are yet to be determined, the question of public finances is at the heart of concerns. Does this dissolution weaken France's financial situation?

The dissolution and its consequences on public finances

Public finances under pressure

France already displays a fragile budgetary situationwith :

  • a public deficit which exceeds 5% of GDP,
  • a debt that is close to 110% of GDP.

There dissolution of the National Assembly adds an additional element of uncertainty, which could weigh on investor confidence and lead to higher interest rates.

Alongside budgetary challenges, France must also face significant investment needs in areas such as defense and the fight against climate change. The dissolution of the National Assembly therefore risks delaying or hindering these essential investments. Which will further weaken public finances.

A political and financial risk for public finances

The dissolution also plunged France into a period of political uncertainty. Which can harm the confidence of investors and financial markets. Indeed, the prospect of an RN government could encourage rating agencies to downgrade the rating of French debt. This would further increase the cost of borrowing for the State and further weaken public finances.

With regard to financial risk, the National Rally program would generate considerable financial costs if it were to be implemented. These amount to more than 100 billion euros per the Montaigne Institute. These measures (notably retirement at 60 and VAT cuts) would deteriorate the recovery of public finances. But not only ! They would also risk further widening the deficit and the debt.

The dissolution of the National Assembly by Emmanuel Macron thus creates a climate of uncertainty which weakens French public finances.

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