What will happen if France’s structural (permanent) fiscal deficit becomes large?

The French government is taking measures that, after the COVID crisis, will increase not the cyclical but the structural fiscal deficit: increase in civil servant wages, public sector recruitment, tax cuts, support for the energy transition, etc. Increasing the structural fiscal deficit is a gamble: it relies either on the ECB keeping its government bond purchasing programmes in place even once cyclical fiscal deficits have been eliminated; or, when this happens, on the economic policies having had the time to lead to a sharp increase in potential growth.