This article makes interesting reading and shows why the French need to be very cautious about what the markets think about their government's intentions. It may not be nice but that's the reality of being in debt isn't it?
http://www.bbc.co.uk/news/business-17811923
Quote:
The point is that the French government and French economy is disproportionately dependent on the goodwill of overseas investors and banks.
Here are the statistics.
According to IMF figures, 59% of France's government debt is held overseas - which means that well over half of all lending to the French state is not motivated by sentimentality or patriotism in any way.
To put that figure into context, just 24.8% of UK general government debt is provided by foreigners.
Perhaps more relevantly, the French government has to borrow a colossal sum equivalent to 18.2% of GDP this year and 19.5% next year to finance debt that is maturing and the current deficit.
So, to extrapolate from the current ownership pattern of its debt, France needs to retain the goodwill of overseas investors to provide loans equivalent to something like 10% of its GDP this year and a similar amount in 2013.
Again a comparison with the UK may be useful: the UK's financing needs for this year and next are much lower, at 14.8% of GDP and 13.9%, with perhaps no more than 4% of this needing to come from overseas.
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Of course, this is no cause for joy here - if/when economies the size of France's get into difficulties anything can happen and that's why I hope the French will ber pragmatic and get on with tackling the problem not exacerbating it.