France's far right bets that someone else will pay for it

Jordan Bardella, the 30-year-old president of the far-right Rassemblement National and the man most likely to run the government if his ally Marine Le Pen wins the presidency next year, has rehearsed his pitch to the world's investors. In an interview on September 6th he promised that his party will oppose any tax increase in the next French budget; that France's support for Ukraine should become transactional, extracting something in return for its billions; and that Paris should court American tech giants, betting that its nuclear plants will power their data centres. Everything, he said, "needs to be reviewed."

None of this is what a sovereign with France's balance sheet can safely promise. That is not a flippant judgment but arithmetic. Gross public debt is on course to pass 120% of GDP next year, from around 119% now, on the IMF's latest projection. The budget deficit, a whisker above 5% of GDP last year and meant to drift down this year, is expected by Morgan Stanley instead to widen to 5.2%. Interest on roughly €3.5 trillion of borrowing has become the fastest-rising line in the budget; hundreds of billions of pandemic-era bonds issued at rock-bottom rates must be refinanced over the next half-decade at far higher coupons. The market has taken note: the ten-year yield has climbed above 4.1%, to levels not touched since the global financial crisis.

The election nobody will pay for

The extraordinary thing is not that France is in this position. It is that Bardella's refusal to raise taxes is, on present evidence, the mainstream of French politics. The presidential election falls in two rounds next April and May. Polls point to a runoff between the hard-left Jean-Luc Mélenchon and Le Pen. Mélenchon wants to cancel the sovereign debt the central bank holds; Le Pen wants to lower the retirement age that a near-bankrupt pay-as-you-go system struggles to fund. "There is nobody coming in on a policy that we need to fix the budget deficit," says David Zahn, a fixed-income manager at Franklin Templeton. Candidates on every flank want to ease fiscal policy, not tighten it.

The market has read their intent without waiting for a government. France's ten-year yield now sits above Italy's, even though Rome carries a heavier debt load, and the premium French bonds pay over German ones has widened for three consecutive months to roughly 88 basis points, its highest since 2024. Rating agencies have moved too: Fitch and S&P both stripped France of its double-A last autumn, and Moody's keeps a negative outlook on its one-notch-higher rating. Two prime ministers have been felled by a hung parliament since the 2024 legislative elections. Nobody expects the next president to inherit a legislature that makes austerity easier.

Transactionalism is not a fiscal policy

Bardella's answer is to look abroad for the money consolidation would find at home. Ukraine, he suggests, should use European assistance to buy only from the defence industries of the countries writing the cheques, and should hand over access to rare earths on the American model. America's tech giants, lured by cheap nuclear electricity and by a deregulatory mood, might build the data centres that power French artificial-intelligence ambition. It is an elegant political construction: the beneficiaries of French spending keep their rents, and the bill is pushed onto foreigners, future taxpayers and bondholders refinancing at higher rates.

The trouble is that extraction is the wrong instrument for the size of the hole. Whatever Ukraine can be induced to pay and whatever Big Tech is willing to build, neither closes a gap measured in five percentage points of GDP and re-prices a borrowing requirement of more than €300 billion a year. A transactional foreign policy can raise money at the margin; it does not change the rate at which French debt grows faster than the economy. That is why the honest reading of Bardella's programme is not that he has a plan to repair France's finances, but that he has declined to have one, and bet instead on the world being accommodating.

None of this argues for imminent default, and it is worth granting the opposing case. The European Central Bank stands behind euro-area sovereigns, and France's OATs are already described as "pre-stressed", trading below fair value before any political premium is added; analysts put a settled spread of 75 to 80 basis points on the 2027 budget, so the market has plugged in a good deal of the bad news. The judgement is therefore not that France collapses, but that the election removes the last brake: the most likely next government is committed to the one policy, no new taxes, that makes the debt arithmetic worse, with the refinancing wall timed to arrive just as it takes office.

For a retail investor who cannot hold "France", the stakes arrive indirectly, in the borrowing costs European governments pay, in the equity of banks that hold the debt, and in the euro. The identifiable moments come sooner than the vote itself: the 2027 budget bill lands in parliament in early October, and Moody's reviews the credit in late October. Bardella's words matter less for what he said than for what they reveal—that the party with the best chance of power offers France no path out of its debt, only a promise that someone else will pay for it.