Could the markets force Macron to back down on pension reforms?

Is Emmanuel Macron reaching his Liz Truss moment when financial markets finally determine his future? On 20 March Moody’s ratings agency strode into France’s explosive pensions reform turmoil. While keeping France’s rating at Aa2 ‘stable’ it nevertheless warned that President Macron’s constitutional sleight of hand denying the National Assembly a vote on the bill risked undermining future macro-economic reforms for the four remaining years of his mandate.

Two days later, citing political tension and social unrest, Fitch Ratings warned that the government’s ability to reduce high public debt will be constrained. Uncertainty surrounding the debt trajectory is reflected in the negative outlook on France’s ‘AA’ rating. Fitch warned that an increase in government indebtedness could lead to a ratings downgrade. Meanwhile Brussels – which first suggested that France needed to reform its over-generous pension system – will be getting cold feet that the EU’s second largest economy could be forced into recession by nation-wide strikes and social unrest dragging down the EU economy as a whole.