France faces market 'doom loop' amid populism
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The gist
Investors are dumping French debt over doubts about the government's budget management amid high interest rates.
The strain hits a centrist government lacking a majority as populist parties lead polls.
Background
Emmanuel Macron is France's president, nearing the end of his time in office and leading a centrist government without a governing majority. Marine Le Pen leads the National Rally, the far-right party topping polls for the French presidency, while Jean-Luc Mélenchon's far-left France Unbowed runs second. Anger over low growth, high inflation, large government debt and weak prospects for the young is feeding protests and populist parties across Europe's largest nations, and investors are questioning whether the French government can manage its budget.
How it unfolded
- 2018Protests over high gas prices swept France; President Emmanuel Macron offered about $11 billion in tax cuts and wage increases to try to quell the unrest.
- Oct 20, 2026Mass riots in France, which began as protests over underfunded schools, were described as a stark example of centrist parties' troubles in Europe.
- Oct 20, 2026Investors were dumping French debt, unsure of the government's ability to manage its budget amid high interest rates and political uncertainty.
Who’s saying what
- Analysts
- Researchers Michal Brzozowski and Joanna Siwinska-Gorzelak of Poland's University of Warsaw say governments face a "doom loop" in which market turmoil and political tumult feed off each other, per their paper on populism and fiscal policy.
- Caution
- Experts warn that growing borrowing in many wealthy nations combined with surging populist parties could combust into an economic crisis.