“It won’t be long before bond investors turn to France after they have finished with Portugal and Spain,” he said over the weekend. “The country’s deficit is much, much higher than anyone realises. No one, not even France, can hide any more.”
Rolet’s comments were supported by bond investors, who said that markets could lose confidence in the euro entirely if it becomes clear that France cannot abide by Eurozone fiscal rules.
Matrix Group’s Bill Blain said: “To get into the euro, France put all its borrowing state agencies off-balance sheet. When the crisis reopens, it’s certainly possible that it will become a focus.”
The warning comes as the IMF puts pressure on the Eurozone to increase the size of its €440bn bailout facility. A report by Dominique Strauss-Kahn, head of the IMF, says that there is a “strong case for increasing the resources available for this safety net”.
However, any increase is likely to face strong opposition from Germany, where taxpayers are already incensed at paying for the Greek and Irish bailouts. The Irish parliament will vote tomorrow on the emergency budget that it must pass in order to qualify for the emergency funding.