Analysis: Europe — 12 October 2026
France’s public debt hits €3.6 trillion as default talk enters 2027 race
Wolfgang Münchau argues in UnHerd that France may at some point stop servicing its debts. The facts are concrete: public debt is €3.6 trillion, or 119% of GDP. Polls now put Marine Le Pen of National Rally and Jean-Luc Mélenchon of La France Insoumise as the two figures most likely to reach next April’s presidential runoff. Mélenchon favours cancelling French debt held by the European Central Bank through a “perpetual zero-coupon” device — keeping the borrowed money and paying neither principal nor interest. Münchau treats that as a technical description of default. Political pressure is already visible: last week about 250,000 students protested, some 500 schools closed, and police arrested almost 7,000 mostly young people.
The background is a debt trap. Once creditors sell, yields rise and servicing costs feed on themselves. Escape routes are default, austerity, asset sales, or central-bank purchases of government paper. French voters have long refused candidates who treat a balanced budget as a priority. Le Pen does not campaign for default, but her latest tax-and-spend programme includes a unilateral two-thirds cut in French payments to the EU budget. Macron’s decade ends with street unrest and markets asking whether Paris will pay.
The contradiction is institutional. France is too big to fail and too big to save. The ECB could buy French bonds and compress yields without shrinking the debt stock; if it did so at scale, Italy and others would demand the same. If it refused, a French crisis could break the euro. Münchau’s analysis is that, without a political union to force convergence, some form of financial crisis is probable. Whether any centrist can still reach the runoff is open.
Sources: UnHerd (Wolfgang Münchau).
AfD waters down euro-exit as German polls break 30 percent
Alternative for Germany officials are preparing to dilute the pledge to restore the Deutschmark, UnHerd’s Peter Franklin reports, citing Politico. Instead of an outright EU exit, a strategy paper moots a referendum on membership if talks to reform the eurozone fail. The shift stands out because recent polls put the AfD above 30%, including first place in North Rhine-Westphalia, not only in the former East. In Saxony-Anhalt, Tobias Rausch has been elected regional parliamentary speaker — described as the first such postwar win for a hard-Right party — even though the AfD is three seats short of a majority.
The comparison drawn is with France. In 2017 Le Pen dropped Frexit and euro-exit; she now leads the presidential field. Franklin’s analysis is that German voters will read “negotiate and decide” as electability, even though David Cameron’s similar formula failed. Attempts to keep the AfD out of Saxony-Anhalt’s government are faltering. Suspicion that some CDU deputies backed Rausch is treated as a crack in the Brandmauer, the mainstream pact to exclude the party.
The open question is whether this is Giorgia Meloni-style normalisation or a bid to reprogram Brussels from inside. In Saxony-Anhalt the AfD, with the left-populist BSW, is pushing a motion to end financial support for Ukraine and normalise ties with Russia. Austria’s Freedom Party polls around 40%; Le Pen wants to cut Ukraine aid and leave NATO’s integrated command. That is the Europe now colliding with Britain’s rejoin debate: Jess Phillips has called for Labour’s next manifesto to commit to returning to the EU, and suggested a general election might suffice instead of another referendum.
Sources: UnHerd (Peter Franklin; Rob Lownie); Politico Europe (calibration).