Mohamed A. El-Erian , Columnist

This Is Not France’s "Truss" Moment

Europe’s second-largest economy is not on the brink of an economic and financial crisis. That’s not to say political turmoil won’t touch the economy.

December 5, 2024 at 12:13 PM UTC

By Mohamed A. El-Erian

Mohamed A. El-Erian is a Bloomberg Opinion columnist. A former chief executive officer of Pimco, he is president of Queens’ College, Cambridge; chief economic adviser at Allianz SE; and chair of Gramercy Fund Management. He is author of “The Only Game in Town.”

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Quite a few observers have described the dramatic fall of the Barnier government in France not just as a political crisis but also an economic and financial crisis. While it does signal significant political divisions that will not heal anytime soon and will undermine growth, this is neither a “Truss moment” for France nor will it lead to a repeat of the 2012 European debt crisis.

Prime Minister Michel Barnier will resign after losing the no-confidence vote in the National Assembly triggered by his attempt to force his budget through, marking the shortest tenure in the history of the modern French Republic. Meanwhile, as French law precludes an election until July, President Emanuel Macron will appoint a replacement.