2008 Financial Crisis and 2010 Sovereign Debt Crisis

Before the subprime crisis worsened the persistent imbalance in public finances, Nicolas Sarkozy was already doing exactly that with the Law of August 21, 2007, in favor of work, employment, and purchasing power, which cost €9.3 billion from 2007 to 2011. The pension reform can be put in the plus column, so too the General Review of Public Policies, aimed at reducing public spending while increasing the efficiency and quality of public action. It generated €8 billion of savings but deteriorated the French health system. The call for more stringent regulation in response to the 2008 crisis would lead to the creation of the Banking Union. This is a considerable breakthrough for European taxpayers. In October 2009, the new government of George Papandreou, Greece’s Prime Minister, revealed that the public debt towered at €300 billion or 113% of GDP. This led to the market gambling on the Euro Area’s Achilles’ heel. As early as December 2009, investor wariness had started to spread to Portugal, Ireland, Greece, and Spain leading to the 2010 sovereign debt crisis. The austerity plan and Economic Adjustment Programmes failed to reassure the markets but Mario Draghi, the President of the ECB, succeeded on July 26, 2012.