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France is waking up to the nightmare of Brexit and the Eurozone debt crisis

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As soon as Macron announced his decision, two European officials immediately compared him to former UK Prime Minister David Cameron

Η ΓαλλΙα ξυπνα τ&omicron ;ειτυκρσχρ υς της εωζνης /></p> <p> photo: Reuters/Stephane Mahe </p> <p>Memories of Brexit awaken in Europe after Emmanuel Macron's decision to call early elections in France.</p> <p>As soon as Macron announced his decision , two European officials immediately compared him to former UK Prime Minister David Cameron, who called and lost a referendum on remaining in the European Union in 2016, Bloomberg writes.</p> <p>Risks in France are at the top of every conversation in Brussels right now, a diplomat told Bloomberg.</p> <p>Both Macron and Cameron were self-confident politicians, establishment figures who found themselves under siege from the populist right and ultimately staged dangerous and unnecessary polls, betting that they would solve their domestic problems. In the first week of the election campaign, the French president's camp even used elements of Cameron's rhetoric.</p> <p>Finance Minister Bruno Le Maire predicted an economic crisis if Marine Le Pen's far-right party succeeds in implementing the his program. This strategy is similar to what became known as 'Project Fear' during Cameron's Brexit campaign.</p> <p>EU officials have spent much of the past decade dealing with the fallout from the UK referendum. But a normal crisis in France could ultimately pose a more serious threat to Europe as it would strike at the heart of the Eurozone.</p> <p>Risks in France are the first topic of every conversation in Brussels right now, said one diplomat at Bloomberg.</p> <p>These fears are also reflected in the markets. The premium investors demand to own 10-year French government bonds just hit its biggest weekly jump on record, while French shares lost about $210 billion in capitalization over the same period.</p> <p>Britain's vote in favor of leaving the EU caused economic shocks that lasted for years, with investors demanding a so-called Brexit premium to hold UK assets.</p> <p>“Markets have already shown sensitivity to the political situation in France. Its high debt makes France vulnerable to changes in investment sentiment, and there is a clear risk that spreads will widen further if the election causes a major shift in policy direction,” says Eleonora Mavroidi of Bloomberg Economics.</p> <p>Macron's campaign team does not believe the lessons of Brexit apply to its case, a person familiar with their discussions tells the agency. Instead, he believes that focusing on the economic risks of Le Pen's program is the way to shore up support for Macron, calling the market sell-off a clear demonstration of the risks.</p> <p>The fall in markets it also evokes unpleasant memories of the Eurozone debt crisis, when countries such as Ireland, Spain and, notably, Greece were targeted by bond investors because of their unstable public finances.</p> <p>Italy, the most indebted country in the E.U. after Greece, it could be the next to come under pressure if investors start to reduce their positions in European government bonds. The risk premium on Italian bonds has also jumped this week as a result of the troubles in France.</p> <p>An Italian official told Bloomberg that policymakers in Rome are watching the situation with concern and that if the French sell off continued, it could test the European Central Bank's willingness to intervene. So far, ECB officials see no cause for concern and have not discussed the possibility of using their tools for times of crisis, Bloomberg's sources say.</p> <p>Political turmoil in France is expected to be discussed at a dinner of EU leaders on Monday. The other leaders will demand an explanation from Macron on how he intends to restore control and also reduce the budget deficit.</p> <p>The European Commission is expected to start the process of formal censure against France over its budget deficit on Wednesday, a move that is likely to exacerbate tensions in the country.</p> </p> <p><noindex></p> <div class=Source: www.kathimerini.com.cy

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