France government has become a danger to the global economy
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France is falling apart, and the global economy is in danger of being collateral damage. Marine Le Pen, a far-right powerhouse, teamed up with leftist lawmakers to pull off a political stunt that toppled Prime Minister Michel Barnier’s three-month-old government. This was a full-blown crisis. Lawmakers in the National Assembly passed a no-confidence vote, sending Barnier packing in record time. That was the shortest tenure for a French prime minister since the Fifth Republic was established in 1958. The chaos has left France without a stable government and no clear way to fix things. And investors are running scared. While US equities made a record high, Bitcoin stumbled a bit and has since remained under $100,000. Risk premiums on French assets have hit highs not seen in more than a decade. The CAC 40 Index, France’s main stock benchmark, is down 1.5% this year, making it one of the weakest performers among major markets. Borrowing costs have surged past those of Greece, a country notorious for its economic woes. Global economy feels the impact France’s instability is felt across the global economy, adding to an already precarious situation. In Germany, industrial production unexpectedly fell in October, a rough start to the final quarter of the year. Germany, Europe’s largest economy, was already struggling with a sluggish industrial sector. Now, even the services industry is showing signs of weakness, according to recent business surveys. The European Central Bank isn’t helping much. Christine Lagarde says the fight against inflation isn’t over yet, even though the ECB is nearing the end of its tightening cycle. France’s instability only complicates the ECB’s plans to stabilize the eurozone. Investors are jittery, and the eurozone’s overall economic health is looking more fragile by the day. Meanwhile, across the Atlantic, the U.S. labor market is showing mixed…
Filed under: News - @ December 7, 2024 6:19 pm