The economic and social situation in France is deteriorating, and the country has faced a general strike. Analysts believe these problems could affect other European economies, including Portugal.
The country is facing protests over issues such as the rising cost of living, leading to school blockades by students and episodes of violence, culminating in today's general strike.
France's economy and public finances are going through a difficult period. Karsten Brezski, global head of macroeconomics at ING bank, noted that 'France is not Greece,' referencing the 2009 financial crisis that shook the European Union.
However, the root of France's economic difficulties lies in the government's inability to meet target expenditures and growth rates, as well as in austerity goals.
National debt has reached 119% of GDP, and the government reported that the budget will again exceed European Union spending limits, pushing national debt close to 122% of GDP, a new record.
On October 30, Fitch revised its sovereign debt outlook for France from 'stable' to 'negative,' although it maintained the long-term credit rating at 'A+' due to worsening growth prospects, increased financing costs, and strained public finances.
Fitch forecasts that France's national debt will rise from 115.7% of GDP in 2025 to approximately 124% in 2028, higher than their previous estimate of 122.7%.
Regarding the economy, the Bank of France signaled a possible downward revision of the 2026 growth forecast after French GDP contracted by 0.1% in the third quarter compared to the previous quarter, driven by a decline in net exports and capital investment.
According to the Competitiveness Forum analysis, political and budgetary problems in France 'significantly affect its interest rates and are likely to slow down this economy (our third trading partner), affecting other European countries.'
The text notes that French interest rates have risen significantly, returning to levels seen during the 2011 and 2012 crises and surpassing similar rates in Italy, and subsequently Spain and Portugal in 2025. This political deadlock and sharp rate increase 'should affect growth in France and harm its main trading partners, including Portugal.'
According to Forum economists, high interest rates on debt issued in Paris could trigger a debt crisis that spreads beyond the country, reaching even Lisbon.
Nevertheless, the Forum notes that the depreciating euro exchange rate may counteract the recessionary consequences of this situation.
The Banque Caregoza also emphasized that France is increasingly standing out with a negative position in the Eurozone sovereign debt market. Despite the 'A+' rating assigned by Fitch, which is identical to Portugal's, 10-year French treasury bonds offer a yield of 5%, the highest since July 2002, compared to 3.95% for Portuguese debt, while France pays more than Italy and Greece.
The reason lies in the trajectory of national debt against budget deficits exceeding 5% and weak economic growth. Portugal, conversely, 'is following the opposite path, with a falling debt ratio and more balanced public finances, which explains the lower yield than its rating suggests.'
However, analysts warn that since France is the second-largest economy in the Eurozone, maintaining this deterioration of its public finances represents an 'increasingly higher risk for the entire European Union.'
Oxford Economics also warns that France's budget crisis may worsen before improving. Spreads could rise above the peak of 200 basis points, projected in the base scenario until the presidential elections in April, without triggering a debt crisis.
Risks that could cause a new rise in spreads include protracted mass protests, a government collapse due to budgetary disagreements, a decrease in the polling gap between Jean-Luc Mélenchon and Marine Le Pen in the second round, and persistent doubts about the budgetary reliability of Le Pen's party, the 'National Rally' (RN).
Macron cannot run for a third consecutive term in 2027, and ultra-right leader Marine Le Pen leads in polls ahead of the first round of presidential elections on April 18. The second round is scheduled for May 2.
Organizers of today's stoppage and mobilization include trade unions, student associations, and 'yellow vests,' who expect to gather hundreds of thousands of people across the country.
The day of strike and national mobilization was dedicated to protesting against the rising cost of living and defending public education and healthcare.
