Analysts Warn of French Debt and Civil Crisis

Wall Street analysts are warning of a potential doom loop in France as the country grapples with a simultaneous debt crisis and civil unrest. Analysts from Macquarie Group characterize the current state as a full-blown civil crisis, linking recent street riots by students protesting education spending to rising sovereign bond yields.

Financial experts argue that prolonged protests may force the government to increase spending, which would further worsen the national debt and drive yields higher. In response to the instability, Sébastien Lecornu, the Prime Minister of France, announced that he will present new fiscal proposals at the end of October.

Analysts from RBC warn that this instability could spread to other European countries and asset classes. They specifically highlighted Italy as a point of concern, noting that the country has recently revised its deficit forecasts upward.