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Significance France is at risk of EU penalties for fiscal laxity and must cut spending next year. However, the leftist bloc that won most parliamentary seats is opposed to austerity; even its most moderate element favours higher spending. The stand-off raises the prospect of a spike in borrowing costs that could prompt the ECB to use new powers to buy French bonds. Impacts Stalemate and uncertainty could last months as no new parliamentary election can be called for a year unless the president resigns. Turbulence around French debt would affect the whole euro-area and may force a stable, if provisional, parliamentary deal on the budget. Social unrest and weak growth could prompt the rating agencies to downgrade France.
A Mon, study studied this question.