France faces ‘catastrophic’ £2.85TRILLION ‘debt explosion’ meltdown as minister warns country is heading for IMF bailout with Emmanuel Macron’s government on the verge of collapse

France is facing a staggering £2.58trillion ‘debt explosion’ and could soon be forced into the humiliation of an International Monetary Fund (IMF) bailout as Emmanuel Macron‘s government teeters on the edge of collapse.

Eric Lombard, the Minister of Economics and Finance, issued a stark warning that ‘a risk exists’ that the IMF will be forced to bail out Paris. 

The revelation comes amid widespread predictions that the French Government may be toppled in a matter of weeks after Prime Minister Francois Bayrou, 74, said he would seek a vote of no confidence in Parliament. 

Opposition parties from Jean-Luc Melenchon’s radical-Left France Unbowed to Marine Le Pen‘s Right-wing National Rally have vowed to bring Bayrou down. Even members of his own camp branded the move reckless. Nicole Dubre-Chirat, one of Bayrou’s MPs, said his decision to seek a vote of confidence was ‘suicidal’.

If he falls, the country would be left rudderless and without a budget at a time when France is groaning under £2.85trillion of debt and facing a deficit of 5.4 per cent of GDP.

Olivier Blanchard, a former French chief economist of the IMF, said a ‘debt explosion’ would be ‘catastrophic’ for an economy that has not run a budget surplus since 1974. 

The looming economic crisis comes as a humiliation for French President Emmanuel Macron, who once claimed that he was the ‘Mozart of finance’.

Lombard said that the Government ‘hopes to and must avoid’ a similar event to the one which hit Britain during the 1970s.   

Bayrou admitted the nation faced a stark ‘choice between chaos and responsibility’. He told MPs that the upcoming showdown was a ‘moment of truth’ at a time when ‘strength and no longer respect for the law (is) triumphing’ around the world.

Some commentators suggest Bayrou deliberately triggered the vote to go down in history as a martyr for tackling debt crisis. Others claim he still harbours faint hopes of clinging on to power.

Speaking at a union congress on Tuesday, Bayrou declared: ‘The weight of debt, with which we burden… French workers and future generations, is going to crush initiatives and, coupled with the demographic collapse, imperils the country’s social contract’.

In a last-ditch attempt to win support from left-wing MPs, he floated a tax raid on the rich: ‘Tax breaks that mainly benefit the wealthiest families and big groups will be abolished whenever they are considered unjust or useless’. 

But his pleas were ignored. Jordan Bardella, the National Rally’s youthful leader, said the party would ‘never support a vote of confidence in a government whose choices make the French suffer’.

Markets immediately took fright. Shares tumbled, banks with heavy exposure to government debt slumped, and the yield on ten-year French bonds shot above 3.5 per cent.

Lombard admitted: ‘I bet that within a fortnight, our debt will be costing more than Italy’s’.

For Macron, the reversal is humiliating. Anne-Sophie Alsif, the head economist at BDO consultancy, told Le Parisien that not since the 1960s had French yields been higher than Italy’s.

Even more dramatically, Lombard warned that ‘a risk exists that the IMF will intervene,’ adding that the government ‘hopes to and must avoid’ a scenario echoing Britain’s IMF bailout in the 1970s. 

Hours later, apparently spooked by the chaos his remarks had unleashed, he insisted: ‘The French economy is solid… and we finance our debt without difficulty. We are today threatened with no intervention either from the IMF or from the European Central Bank’.

Bayrou has proposed a brutal package of £37.8billion in cuts and tax rises, including axing two public holidays and slashing healthcare spending. The budget has triggered fury across the political sphere.

His confidence vote, scheduled for September 8, is now seen as the desperate last gamble of a prime minister whose days are numbered.

Boris Vallaud of the Socialist Party said Bayrou had effectively already resigned. Even members of the ruling coalition are looking past him. 

Nicolas Metzdorf, one MP, remarked: ‘I hope that a new government will be appointed very quickly.’ 

Marine Le Pen is calling for fresh elections. Melenchon wants Macron himself to resign, paving the way for an early presidential vote.

But the embattled president insists he will not repeat last year’s shock snap election that plunged the country into deadlock. That decision has already cost him one prime minister – Michel Barnier, who fell after three months – and now threatens to topple Bayrou after just nine.

Adding fuel to the fire, extremists online are mobilising a ‘let’s block everything’ campaign of strikes and roadblocks beginning September 10. 

The movement, born in far-right conspiracy circles but quickly adopted by unions and the left, has gone viral. Telegram groups are buzzing with plans for ‘citizens’ resistance networks’ and nationwide disruption. 

And ordinary voters are behind it – a Harris Interactive poll for RTL radio this week found 63 per cent support for the movement.

At a fiery activist meeting in Orléans, one speaker declared: ‘We have not managed to drive back the bosses, the bourgeoisie and its political class because we haven’t blocked the country.’

Another went further: ‘They have to feel the cannonballs. They have to be scared.’

It is the second time in a year the effect of President Macron’s hasty parliamentary dissolution of July 2024 threaten institutional chaos and even civil unrest.

Far from offering the ‘clarity’ that Macron wanted after his defeat in European polls in June 2024, the newly elected National Assembly was split three ways between centrists, the populist right, and the left – meaning that no government of any stripe could hope for a majority.

Macron himself was cut out of domestic politics and forced to focus on international affairs.

In 2018, Macron violent rioting, known as the ‘Yellow Vest’ movement, broke out across France after he offered economic concessions to his countrymen which were expected to cost the country £9billion following a planned fuel tax hike.

The president had taken to the national airwaves to address the spiraling crisis for the first time in December. He announced an increase in the minimum wage, tax cuts for retirees and other concessions aimed at calming the streets. 

But a leader of the Yellow Vest movement said that Macron’s peace offering was not enough.

The crisis began as protests against a planned fuel tax hike – which Macron has abandoned – but quickly mushroomed into a broad and visceral demonstration of anti-government resentment aimed squarely at the president, who was seen by many as being out of touch with the working French. 

And only last year, French farmers choked off major motorways around the Paris and threatened to blockade the capital during an intensifying standoff with the government over working conditions, incomes, red tape and environmental policies.

The farmers said the policies undermined their ability to compete with other countries.

Macron offered a series of concessions to the French farmers. 

These included abandoning a planned increase in diesel fuel duties, offering the equivalent of some £50million to organic farms, and imposing fines on supermarkets which do not pay enough for French produce.

Although the protest movement has since fizzled out, the frustration remains palpable in the French countryside.