Swiss Finance Minister Karin Keller-Sutter has warned that the persistent rise in public debt across the U.S. and Europe threatens economic stability, with France’s fiscal challenges potentially even triggering a crisis for the euro. Meanwhile, nationwide protests have erupted in France, further escalating political risk.
According to Reuters, Keller-Sutter—speaking to Swiss public broadcaster SRF on the 16th while attending the annual meetings of the International Monetary Fund (IMF) and the World Bank in Bangkok—noted that sovereign debt risks in major economies warrant close attention. She added that energy prices are also a source of concern for policymakers.
Although Switzerland maintains one of the lowest levels of public debt in Europe, Keller-Sutter emphasized the need to consider the broader international landscape. She specifically highlighted the U.S. and Europe, warning that France’s debt issues could potentially spark a euro-area crisis.
France’s public debt, budget deficit, and sluggish economic growth have fueled ongoing concerns regarding the country’s fiscal health, while political divisions have further complicated efforts to restore fiscal discipline.
France’s debt has climbed to a record high of approximately $4 trillion—equivalent to 119% of its gross domestic product (GDP), the highest debt-to-GDP ratio seen since the immediate post-World War II era. Furthermore, yields on French government bonds reached a 24-year high this month, and the spread between French and German 10-year bond yields—a key indicator of the risk premium on French debt—has widened significantly.
Earlier this month, French Prime Minister Sébastien Lecornu unveiled a budget proposal targeting a reduction in the deficit-to-GDP ratio from 5.4% to 5% by 2027; the plan faces its first critical vote in the National Assembly on the 20th. However, political uncertainty has led markets to question the government’s capacity to implement the necessary fiscal austerity measures.
France has recently been gripped by nationwide demonstrations, which in some cities have escalated into riots. Luxury boutiques and supermarkets have been looted, while public buildings have been vandalized or even set on fire. French President Emmanuel Macron has called for “calm and order.” Mujtaba Rahman, head of Europe practice at Eurasia Group, points out that France is facing a triple crisis: a challenge to liberal democracy, fiscal mismanagement, and discontent among the youth—with the fiscal situation being the most perilous. He warns that if the government fails to pass a budget, the cost of servicing its debt could surge, potentially forcing the country to seek assistance from the IMF or the European Central Bank.