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France's PM skirts another crisis and markets like it — but it comes at a price

1. France suspends pension reform, avoiding government collapse for now. 2. No retirement age increase until January 2028, impacting France’s fiscal outlook. 3. Suspension costs estimated at 400 million euros in 2026 and 1.8 billion in 2027. 4. Potential long-term fiscal consequences if reforms remain contentious before 2027 elections. 5. Investors hopeful for 2026 cost-cutting budget passage amid political stability.

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Why Neutral?

While the suspension appeases short-term investors, it defers necessary reforms, potentially raising long-term financial risks. Historical events show that delays in fiscal reforms can lead to market instability, evident during past crises in the Eurozone.

How important is it?

The article discusses France's policy changes which could trigger broader European market reactions, indirectly affecting S&P 500 companies engaged in international trade or investment. The S&P often mirrors global economic sentiments; thus, what's happening in France has potential repercussions.

Why Long Term?

The implications of suspended reforms will persist beyond 2027, affecting France's debt trajectory. Similar delays in other European countries have led to protracted fiscal challenges, impacting broader EU recovery.

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