Jean-Luc Mélenchon, the firebrand leader of France’s La France Insoumise and candidate for the upcoming presidential election, has floated a drastic solution to the country’s mounting debt crisis: simply set the central bank’s holdings of French debt securities on fire. The remark, made in an interview reported by Le Figaro, has ignited a firestorm of criticism from economists who warn such a move would be an economic catastrophe.
“Where are the 18 per cent of debt securities? In the coffers of the central banks of each country… Just go there, take them and put them in the fire,” Mélenchon said, adding with a flourish: “No one will ever realize that it has disappeared.” Even as he conceded he was “caricaturing a little, barely,” the suggestion taps into a broader fiscally adventurous platform that has alarmed financial experts ahead of a high-stakes election.
Mélenchon’s proposal comes as France’s public debt has ballooned to more than €3.5 trillion ($3.8 trillion) in the first quarter of this year, according to official figures, representing a staggering 117.5 per cent of the country’s GDP. The deterioration has been fueled by years of heavy state spending, including pandemic-era support measures, energy price shocks following the war in Ukraine, and generous social welfare programs. The result is a national balance sheet that is now among the worst in the eurozone.
The country is already under pressure from the European Union to rein in its deficit, which remains well above the Maastricht Treaty’s three per cent ceiling, with debt levels required to stay below 60 per cent of GDP. Paris faces potential economic sanctions if it fails to comply. But rather than proposing a credible consolidation plan, Mélenchon appears to be offering a form of fiscal alchemy.
Olivier Redoulès, director of studies at the Rexecode Institute think tank, did not mince words in responding to Mélenchon’s idea. Cancelling debt held by the central bank is effectively a form of money creation, he explained, and doing so would almost immediately trigger inflation. Redoulès pointed to the examples of countries like Turkey, where similar experiments with debt erasure have led to double-digit price increases that hit ordinary consumers hardest.
But the deeper danger, Redoulès warned, lies in the erosion of trust among France’s international creditors. If investors come to believe that the French state is willing to unilaterally write off obligations, they will demand a higher risk premium on French bonds. This would send interest rates soaring, making it even more expensive for the state to borrow money—at a time when France still faces a projected annual budget shortfall of around €100 billion.
Should that scenario unfold, a Mélenchon government would be forced into an impossible choice, the economist said: implement harsh austerity measures, or dramatically raise taxes to cover existing commitments—and that’s before even accounting for the additional spending programs envisioned by his radical-left coalition. In the worst case, Redoulès suggested, the move could put France on a path toward expulsion from the European Union and ejection from the euro currency.
Mélenchon’s proposal is not his only controversial economic stance. He has previously promised to pull France out of NATO, a move that would reshape European security architecture. Yet even the NATO pledge pales beside the debt-erasure plan in terms of immediate market impact.
Interestingly, the turmoil caused by Mélenchon’s radicalism may inadvertently benefit his political rivals. Marine Le Pen’s National Rally has long been viewed with suspicion by French business leaders, who oppose her party’s restrictions on cheap foreign labor and its support for generous welfare benefits for native French citizens. But as Mélenchon moves further left on fiscal policy, some of that business opposition to Le Pen may soften. Le Pen herself has argued that France can reduce its debt by cutting government handouts to migrants and reducing taxes to spur growth—positions that, while controversial, are seen as more market-friendly than the wholesale cancellation of debt.
The upcoming presidential race in France is shaping up to be a referendum on public finances, with candidates offering sharply divergent visions. Mélenchon’s “burn the bonds” approach, however, is drawing warnings even from quarters that might be sympathetic to his social goals. The consensus among economists is clear: there is no magic trick that can make €3.5 trillion disappear without serious consequences. The question now is whether voters, anxious about the cost of living and weary of political dysfunction, will be persuaded by the theatrics or the arithmetic.
Source: www.breitbart.com — https://www.breitbart.com/europe/2026/08/13/set-securities-on-fire-french-far-left-prez-candidate-melenchon-suggests-cancelling-public-debt/