The French and euro area economies are highly interconnected. Even though France weathered the crisis relatively well, it is not immune to the profound difficulties afflicting the euro area. Under pressure from financial markets, the authorities have gained credibility in their handling of the budget deficit, and fiscal discipline is being rewarded by the low cost of debt financing. While embarking on fiscal consolidation was inevitable given the level and uptrend of debt, its short-term impact has been to undermine economic growth and exacerbate social problems.