HomeTop StoriesThe EU's two largest economies are struggling with political uncertainty

The EU’s two largest economies are struggling with political uncertainty

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The European Union’s heavyweights, France and Germany, are facing political challenges, with the former hit by a credit downgrade and the latter by a government confidence vote.

France’s leaders have struggled to pass a budget in the face of far-right opposition, with a third prime minister in a year picking up the pieces from President Emmanuel Macron’s snap summer elections that saw centrist and moderate parties lose huge support.

German Chancellor Olaf Scholz lost a confidence vote on Monday, paving the way for February elections that will likely see him removed from power. The statements about his rule so far have not been exactly positive: “It wasn’t all bad,” was the best Die Zeit could come up with.

SIGNALS

The new Prime Minister of France has the same problems as the old Prime Minister

Sources: Le Monde, The Guardian, Politico
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The French political landscape is defined by struggle, with French newspaper Le Monde arguing that now is the time to ‘get a grip’. President Emmanuel Macron, struggling to hold on to power, has chosen centrist François Bayrou as his third prime minister of the year, but all the old problems remain: the far right is on the rise, the centrists have lost hectares of political ground, and the government is at an impasse. Despite this, Marine Le Pen’s far-right National Rally – responsible for toppling the previous government – could still take place: after meetings with Bayrou, Le Pen said she felt “heard” by the new leader.

France and Germany are embroiled in economic problems

Sources: ING, Euronews

Germany narrowly avoided recession this summer, while France has the highest budget deficit among eurozone economies. It is no surprise that disagreements over their respective budgets have driven their governments to collapse. With Germany unable to hold elections until February and France until June 2025, both countries have created a “political vacuum” in Europe, Euronews wrote. Unstable leadership could also hamper the bloc’s efforts to tackle sputtering competitiveness and the threat of trade tariffs from both China and the US, as well as Russian aggression on its borders.

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