France in Shambles

Source: Pexels by Jean Marc Bonnel

On September 10, immense protests erupted in the streets of Paris, following the appointment of a new Prime Minister, Sebastien Lecornu. The nationwide ‘Block Everything’ protests were not lost in interpretation since literally everything - transportation, businesses, and schools - came to a halt. The passionate demonstrations of French citizens, who were outraged by the $44 billion in public spending cuts, once again highlighted the fragility of the French political and economic system. Whilst people continue to express their rage on the streets, the French government is on the brink of total collapse, with the National Assembly unable to respond properly due to internal conflicts. What had gone so badly for France for them to arrive at this dangerous junction, where all paths are thorny?

Economic Situation

Debt—humanity’s favorite magic trick. Isn’t it so easy to borrow money, spend frivolously, and then forget it even existed? Don’t worry, though; debt never forgets, and it brings back vengeful friends named interest and compound interest. Now, France, in this case, has accumulated a staggering amount of debt over the years, totaling over €3.4 trillion, which is around 115% of its GDP. This is an alarming level of debt and it raises sustainability concerns. Furthermore, in addition to the current debt, unless prompt economic action is taken, that number will continue to grow.

Source: IMF

As shown in the chart above, France’s budget deficit in 2025 is approximately 5.46%, significantly exceeding the EU's mandated limit of 3%, a threshold designed to ensure fiscal stability. This number indicates that France needs to keep borrowing around 5.46% of its GDP every year, and there seem to be no signs that the deficit will shrink in the future. In this situation, a country would hope to stimulate its economy, yet France’s GDP growth is not expected to exceed 0.6% in 2025. Consumer confidence is at an all-time low, and unemployment remains high, signalling concerns about inflation and overall uncertainty regarding France’s economic future.

Source: FRED

The bond market is yet another place where France's current position seems concerning, with its long-term interest rate overtaking Greece. Effectively, this implies that people consider it more dangerous to invest in France than in Greece, a country that went through an economic devastation just 15 years ago. France’s sudden yield increase is also apparent in the second graph, where all yields were set to zero. The graph makes it clear that investors' confidence in France is dropping more rapidly than in other EU countries. To add to this issue, a credit agency called Fitch lowered France’s rating to A+ from AA- due to "the increased fragmentation and polarization of domestic politics." By doing so, they officially presented their doubt on France’s ability to lower its debt and budget deficit.

The current situation is dangerous due to a potentially infinite cycle of debt accumulation: as France borrows to cover its deficit, interest payments consume an ever-larger portion of the budget, forcing more borrowing simply to service existing debt. With interest rates rising and growth remaining stagnant, this spiral could accelerate—each year requiring more debt to maintain the same level of public spending.

Naturally, several measures could be taken to escape this trap, including raising taxes, cutting public spending, or implementing structural reform to boost productivity. However, each of these options is an extremely unpopular option in modern-day France. Every time the government takes a step towards dealing with the debt issue, they are forced to take two steps back as it finds itself paralyzed due to an overwhelming political resistance. Therefore, this debt issue can not be appropriately examined without first analyzing the political landscape, for the government’s inability to act comes not from ignorance, but from their own ranks.

Political Landscape

To properly present the complexity of France’s current political deadlock, it is essential to start with the 2024 snap elections, which was the turning point that set their downfall in motion. Following the results of the European election in 2024, President Emmanuel Macron’s party “Ensemble!” was defeated by the far-right National Rally party by double the votes. These European elections served as a depiction of the decline of Macron’s centrist policies and the increasing attraction to nationalist alternatives. Seeing those results, President Macron made a sudden decision to call for snap elections.

His rationale for this decision remains puzzling, especially given the far-right National Rally party's increasing popularity at the time. He may have sought to clarify the French public's true intentions or possibly hoped to frighten voters into reconsidering their stance on the National Rally party. Nevertheless, his motivations are irrelevant in this case. What matters is that Macron made this choice, and it backfired tragically.

Before the snap elections, Macron’s position of power was already in turmoil. His approval rating was extremely low, whilst his coalition “Ensemble!” no longer held the majority in the National Assembly at 245 seats. However, his gamble had worsened his already declining position. His approval rating plummeted, and his party’s influence diminished to 159 seats, effectively removing all the power Macron had over domestic affairs.

The leftist party, New Popular Front, became the largest bloc with 182 seats, Macron's centrists fell to second with 159, and the far-right National Rally secured 142. The power within the National Assembly was fractured into roughly three equal blocs with incompatible ideologies, meaning that passing any meaningful legislation is practically impossible. The left wants higher taxes, more spending and renewable energy, whilst the right demands cuts to taxes and anti-immigration policies. It is borderline impossible to pass any debt-associated bills when fundamentally different parties hold almost equal amounts of voting power. By calling the snap election in 2024, Macron has ultimately sabotaged himself and his own country.

With €3.4 trillion in debt and a 5.46% budget deficit, France needs to take immediate action, but the government fights over the passing of any bills at all. On top of that, President Macron continues his political maneuvering by constantly installing new prime ministers after their predecessors are forced to resign. During his second term as the president, Macron appointed five different prime ministers, with most of them being ousted by a confidence vote for suggesting policies that would cut spending and increase taxes.

The chasm between different parties has never been bigger, whilst the ordinary people are outraged by a political system that has completely separated itself from their needs. The housing is unaffordable, real wages are falling, crime rates are increasing, and unemployment is high - basically, people are furious, and all that hatred is directed at no one else but Emmanuel Macron. This public fury reached a boiling point following Macron's most recent appointment in September 2025 of Defense Minister Sébastien Lecornu as Prime Minister, which is a move seen as yet another desperate attempt to maintain control. In response, “Block Everything” protests exploded on the French streets, demanding Macron’s resignation.

Sebastian Lecornu, appointed in September, was immediately tasked with the tough challenge of calming the public, gaining support in the National Assembly and stopping the escalating national debt. It is fair to say that he was not up to the task, for he resigned on October 6th due to the political division within the parliament, which marks him as the shortest-serving head of government since 1958.

"The struggle itself toward the heights is enough to fill a man's heart." - Albert Camus, The Myth of Sisyphus.

It is a bit ironic to quote one of the greatest French authors when addressing the fall of France's leader, yet it fits perfectly. Macron continues to struggle with achieving stable governance by continuing to elect new prime ministers, but unlike Sisyphus, who found meaning in his eternal struggle, Macron's repetitive appointments serve no purpose beyond prolonging his own political relevance. Although his approval rating has never been lower at 17%, Macron has stated that he won’t resign, effectively saying that this political instability will continue for another two long years. Macron's determination to remain president in the wake of Lecornu's resignation suggests two possible paths: the appointment of yet another Prime Minister or the calling of early legislative elections. Both options are unlikely to break through the ongoing deadlock.

In this political landscape, where every politician prioritizes what is in their own best interest, no serious attempt can be made to shrink the constantly growing debt that is threatening the nation’s future. The €3.4 trillion keeps growing heavier while politicians engage in blame-shifting rather than addressing the crisis. Without any conclusion to the deadlock, France will fall not to their growing debt, but to the corrosive political greed that prevents any meaningful action.

Possible Spillovers

It is essential not to forget that France is the second-largest economy within the EU after Germany, constituting around 16% of EU GDP. If France fails to fight back against its debt, which is most likely, the consequences will not necessarily be confined to its borders. France’s closest trading partners, namely Germany, Italy, Spain, the UK and USA, will be inevitably affected in case of a crisis. What’s even worse is that a significant part of France’s debt is held by European banks. If the market keeps losing confidence in France, the price of their long-term bonds falls drastically, which in turn could cause banks to lose vast amounts of money and become weak lenders. As a matter of fact, this is exactly what happened in Italy and Greece during the Eurozone crisis. Considering this, France’s debt must be treated as a global issue, as not addressing it could affect the entire Eurozone.

However, France’s parliamentary deadlock has proved itself resilient against this incoming threat. The protests keep expanding, while President Macron tries to fix his own mess. This is a situation that requires collective effort, and if it is not resolved promptly, France is bound for decline.