A French accident waiting to happen

Oct 27, 2026

France is in a financial crisis. That much is clear. What isn’t so clear is exactly why.

This seems silly even to ask. The recent destruction and violence have been appalling, even given the famous French willingness to take to the streets and the barricades. The most likely winner of next year’s presidential election is Marine Le Pen, who inherited France’s far-right movement from her father, a poisonous Holocaust denier and Nazi sympathizer. Her closest competition comes from the veteran hard-left socialist Jean-Luc Melenchon, who has proposed setting fire to government debt. Isn’t it obvious that investors would flee from such a nation?

But it’s not that clear. The yield on French debt is still lower than that of the U.K. (and until this month, lower than U.S. yields). Its deficit, as a share of gross domestic product, is barely half that of the U.S. China operates a higher primary deficit. Government debt is slightly more elevated than GDP and above the average for the euro zone. Italy’s is much higher. Besides, if this were really what was making the bond vigilantes mad, their target should be Japan, where government debt is more than triple GDP.

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