EXCLUSIVE: Bob Lyddon estimated that a bailout could require £1.7 trillion, warning that the consequences could prove catastrophic for the bloc’s finances.
French President Emmanuel Macron (Image: Getty)
France could require a huge bailout that threatens to overwhelm the European Union’s finances and leave member states liable for trillions of euros in debt, an expert has warned. Financial commentator Bob Lyddon has warned that France’s worsening political and social instability could trigger a crisis in its bond market, potentially forcing Brussels to intervene to prevent a wider financial meltdown.
He said: “France’s political and social situation is now so fragile that financial markets could seize up on their bonds at any moment. The yield on them is now around 4.9% and the highest for 20 years. The yield on French bonds is about 1.5% higher than on German bonds.”
Mr Lyddon – who outlined his points in an op ed published this week – argued that the European Central Bank’s Transmission Protection Mechanism, designed to address disorderly market pressures on eurozone government bonds, would not provide a solution.
He said: “France, for several reasons, is ineligible to benefit from the Transmission Protection Mechanism, and, given that a bailout package for France would need to be €2 trillion, the other bailout mechanisms with their own legal personality – the European Financial Stability Facility, and the European Stability Mechanism – are not set up to support an operation of that magnitude.”
Instead, he believes the EU itself would have to step in, potentially using an existing financial assistance mechanism and expanding its capacity to borrow.
Mr Lyddon said: “That leaves only the EU itself, which has borrowing powers in case of an emergency: hence the Coronavirus Recovery Fund (now re-named as Next Generation EU).
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Prime Minister Andy Burnham (Image: Getty)
“It also has a bailout mechanism already live: the European Financial Stabilisation Mechanism, or EFSM.”
He pointed to the European Commission’s statement that the EFSM “remains in place and can be used if the need arises”, arguing that its lending ceiling would have to be raised considerably to finance a French rescue.
He suggested this could be justified under EU law through emergency powers and approved by qualified majority voting in the European Council, without the European Parliament having a say. That is Mr Lyddon’s interpretation of how such an intervention could be authorised, rather than an agreed EU bailout plan.
The potential scale of the debt is central to his warning. Mr Lyddon said the EU already had more than €1 trillion in debt, potentially reaching €1.2 trillion by the end of 2027, before further borrowing under its next long-term budget.
He said: “Bailing out France would add a further €2 trillion to an EU debt amount already sailing through €1 trillion, well on the way towards €1.2 trillion by the end of 2027, and with plenty of extra programmes on the stocks for its next budget period 2028-34.”
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He also argued that EU institutions with their own borrowing powers and separate legal personalities could struggle to survive such a rescue.
Mr Lyddon said they “could hardly survive a bailout of France” and should be folded into the EU itself, adding a further €700 billion to its debts.
His figures suggest a French bailout, combined with existing EU borrowing and the additional liabilities he identifies, could leave the bloc facing a debt burden of around €4 trillion.
However, these are Mr Lyddon’s estimates and predictions, not an official EU forecast. France has not been granted a €2 trillion bailout, and no decision has been announced to merge the EU’s borrowing institutions into the Union.
The warning also carries a political message for Britain, which left the EU in 2020.
Mr Lyddon said: “All the EU’s debts are the full responsibility of EU members, old and new – like the UK, in case Andy Burnham, the Institute for Public Policy Research, or any other cabal of Rejoiners, managed to force us back into it.”
He added: “Taking on liability for €4 trillion of EU debts would be a nice ‘welcome back’ present for us – that is £50,000 for every inhabitant of the UK.”
The UK is not currently liable for EU borrowing in the way a member state is, and any implications of a hypothetical future return would depend on the terms of membership.
Mr Lyddon’s warning comes amid concerns over France’s public finances and political instability. While a sharp deterioration in borrowing conditions could create serious problems for Paris and the wider eurozone, the suggestion that it would trigger the collapse of the EU’s financial structure remains speculative.
Conscription age limit for men as UK told ‘prepare for war’
If World War 3 breaks out, men of these ages could be forced to join the UK’s army and fight in Europe.
Pat McFadden discusses prospect of conscription in 2025
Preparation for WW3 worst-case scenarios could be stepped up after the head of the army called on the UK’s political leaders to start a ‘frank conversation’ with the public about preparing for war.
General Sir Roly Walker told Sky News that ‘every’ citizen will be ‘asked to make sacrifices’ and play their part in the defence of the country.
It comes in the wake of escalation between Russia and Ukraine as the US, unthinkably, appears to be siding with Russia. US President Trump has in the past week urged Ukraine to ‘get a new leader’ after signing a deal with Russia for diesel supplies, and has increasingly blamed the global price of diesel on Ukraine’s refusal to surrender to Putin, rather than the US’ war with Iran.
It’s not something anyone wants to think about, but as tensions escalate around the world, there is a possibility that World War 3 could erupt. Just this past summer, the UK government last year told people to prepare for war on British soil, and is urging better preparedness for conflict across society.
British people could be forced to join the army if WW3 breaks out (Image: Getty)
Assuming tensions continue to ramp up and a new global conflict were to erupt, there are some indicators about what would happen if the UK went to war and needed to introduce conscription, or mandatory military service, whether in a WW3 situation or not.
In WW2, conscription began for men aged between 20 and 22 in 1939, up to six months before the war actually broke out.
The UK Parliament website says: “During the spring of 1939, the deteriorating international situation forced the British government under Neville Chamberlain to consider preparations for a possible war against Nazi Germany. Plans for limited conscription applying to single men aged between 20 and 22 were given parliamentary approval in the Military Training Act in May 1939. This required men to undertake six months’ military training, and some 240,000 registered for service.”
But when war was declared, the age range was immediately widened to any man aged 18 to 41.
It continues: “On the day Britain declared war on Germany, 3 September 1939, Parliament immediately passed a more wide-reaching measure. The National Service (Armed Forces) Act imposed conscription on all males aged between 18 and 41 who had to register for service.”
The only men who weren’t called up were those who were too unfit medically, or who worked in vital industries like baking, farming, and medicine, which were vital to the war effort.
It adds: “Those medically unfit were exempted, as were others in key industries and jobs such as baking, farming, medicine, and engineering.”
By the end of 1941, women and ‘all childless widows’ between the ages of 20 and 30 were called up, while men aged up to 51 were called up for military service. Even those aged 52 to 60 were required to take part in “some form of military service.”
In 2024, Grant Shapps, who at the time was Defence Secretary, said that we are “moving from a post-war to a pre-war world”, and General Sir Patrick Sanders, Britain’s most senior army officer, called for an increase in the size of the army and said that the country needed to increase preparedness for conflict.
It isn’t clear what would happen to those refusing to serve in a potential WW3 scenario, but in WW2, British ‘conscientious objectors’ were put on trial, with some given mandatory jobs to contribute to the war effort in other ways instead.