Lagarde Calls Any Euro Area Government Collapse ‘Worrying’

Date: 01 September 2025 - 22:14

News ID: ۱۴۳۰۶۴

PARIS (Bloomberg) - European Central Bank President Christine Lagarde warned that any government collapse in the currency bloc is a concern as the prime minister of her home country, France, appears likely to be toppled in a confidence vote next week.
The government in Paris is set to be forced to resign on Sept 8 as opposition parties refuse to back the plans of Prime Minister Francois Bayrou for sharp spending cuts and tax increases.
“All risks of governments falling in all euro area countries are worrying,” Lagarde said in an interview with France’s Radio Classique on Monday. “Markets evaluate risks and we’ve seen the country risk increase in recent days,” she added, in response to a question on France.
The prospect of renewed uncertainty over how France can tackle what’s now the euro area’s widest budget deficit with a bitterly divided parliament has reignited investor concerns. Selloffs in French bonds last week drove up borrowing costs relative to Germany to highs not seen since January.
Lagarde, a former French finance minister, said France is a “respected” borrower but has become associated with a risk premium.
“I look very closely at spreads,” she said. “The additional cost for French debt has increased and is just below Italy, which wasn’t the case a few quarters ago.”
The ECB president said tackling debt is crucial for all countries, but she would not comment on the political means to get there.
“There needs to be discipline in terms of public finances to send the signal that one wants a sustainable debt, that one has a credibility in financial markets to allow for the financing of the state, local authorities, and the country,” she said.