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. While the consequences on the political landscape are yet to be determined, the issue of public finances is at the heart of concerns. Does this dissolution weaken France’s financial situation?

Public finances under strain

France already shows a fragile budgetary situation, with :

• a public deficit exceeding 5% of GDP,
• a debt nearing 110% of GDP.

The dissolution of the National Assembly adds an extra element of uncertainty, likely to weigh on investor confidence and lead to higher interest rates.

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

A political and financial risk for public finances

The dissolution also plunges 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 prompt rating agencies to downgrade France’s debt rating, further increasing borrowing costs for the state and further destabilizing public finances.

In terms of financial risk, the National Rally’s program would incur considerable financial costs if implemented. These costs are estimated at over 100 billion euros by Institut Montaigne. These measures (notably the retirement at 60 and VAT reductions) would deteriorate the recovery of public finances, and not only that! They could also further deepen the deficit and debt.

The dissolution of the National Assembly by Emmanuel Macron thus creates an atmosphere of uncertainty that weakens French public finances.