‘No free lunch’, Germany warns amid French debt woes

Concerns have been mounting in Germany, the eurozone's biggest economy, about the state of public finances in neighboring France, the eurozone's second-largest economy.(AFP) — Germany’s economy minister urged other European countries Thursday to maintain sound public finances as concerns mount about French debt levels, warning: “There is no free lunch.”Concerns about public spending in France have pushed government borrowing rates in recent weeks to levels unseen since the global financial crisis.Asked about French public finances, German Economy Minister Katherina Reiche noted that French Finance Minister Roland Lescure was “fighting to create a budget that is constitutional and geared towards the future.”The French government last week unveiled a 2027 budget bill that calls for spending cuts and tax increases to rein in the budget deficit.Reiche went on to stress that public debt is “a very important indicator of sound fiscal and financial policy.”Noting that Germany still enjoyed top-tier debt ratings from major agencies, Reiche added that the “more countries in Europe are at least close to that level, the better.”She also acknowledged that Germany’s increased public spending on defense and infrastructure would cause the country’s debt to balloon and that the debt would need to be repaid.“There is no free lunch,” she added, briefly switching to English.“That applies to public finances as well,” she said. “And we know that France is working on this. We also see the major reform efforts being undertaken under difficult political conditions.”Concerns have been mounting in Germany, the eurozone’s biggest economy, about the state of public finances in neighboring France, the eurozone’s second-largest economy.Marcel Fratzscher, president of the DIW economic institute, warned of a “vicious circle” in which rising debt and political paralysis weaken confidence in public institutions.“The result is a weaker economy and a growing risk of recession, causing deficits and debt to increase even further,” he told the Rheinische Post newspaper.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads