The Bank of England expects inflation to average 3.7 per cent in the final three months of this year before rising to 4.2 per cent in early 2027. A higher-than-anticipated reading could force the Bank to raise interest rates in November, which would heap further costs on mortgage holders, businesses and the Treasury itself.
France’s debt-to-GDP ratio stood at 115.6 per cent in 2025, with a budget deficit of 5.1 per cent, compared with 94.3 per cent and 4.3 per cent for the UK.
Jim Reid, a strategist at Deutsche Bank, warned that the protests would make international investors reluctant to buy French government bonds. “With France already facing a difficult fiscal backdrop and the 2027 election approaching, the weekend adds another layer of political risk for markets,” he said.
Maike Currie, vice president of personal finance at PensionBee, described the Chancellor’s position as “an unenviable balancing act”. She said: “Inflation is squeezing households, borrowing costs are squeezing the Treasury and fragile growth is limiting his options.”
Ms Currie warned that Mr Healey needed to persuade markets he could bring the public finances under control without stifling economic growth. “With confidence already fragile, getting the sums wrong could prove particularly costly,” she said.
The French government is drawing up a budget involving cuts to pensions and departmental spending outside defence, but there are mounting fears that political pressure could derail those plans.