One time always hides another: France faces its debt and the economic impasse

For several days now, panic has been setting in in French economic circles. The cause? The explosion of customs duties that threatens our trade. We are heading straight for a wall, and the worst part of this situation is that everyone is pushing us there. Instead of taking action, we have complicated things to the extreme.

The real origin of this chaos remains unsaid: the public debt. For years, the state has been flying on autopilot, and not in calm weather. France is facing €3 trillion in debt, a headwind that weighs heavily on its economic future. Since François Bayrou’s arrival in government, the results are clear: barely €3 billion in savings in the last budget, compared to €27 billion in additional taxes, disguised as hidden tax increases.

France persists in its two failings: spending ever more and taxing ever more. These two failings, far from being corrected, are pushing us deeper into the debt abyss every day. Moreover, some political actors are using the current global situation to justify the absence of structural reforms. We’re not spending less, we’re not taxing less, but we remain stuck in a deadly status quo.

Take the case of pensions: the real debate should have focused on the retirement age. 67 in 2033 seems inevitable if we want to avoid a dramatic drop in pensions for future generations. But that’s never discussed. The government prefers to flatter voters by promising 62, an age proudly brandished at election promise events, while being well aware that it no longer reflects the country’s economic reality.

The situation is alarming. France, once ranked the 11th richest country per capita in the 1980s, has now fallen to 23rd place. This decline is the result of a social model that is too expensive and increasingly unsustainable. Low salaries are on the rise, while highly skilled workers are fleeing abroad, fleeing a fiscal and economic environment that has become stifling.

Why are these talented workers leaving the country? The costs are too high. France taxes industry heavily, which discourages investment and destroys jobs. We are thus seeing our skilled jobs disappear, while the country struggles to retain its talent. And the crucial question remains: how can we accept further debt to finance unemployment, pensions, and healthcare, if not by cutting public spending?

The reality is that social security is the main source of our public deficit. It is imperative to rebalance our social security accounts to be able to invest in the future. This is why it is urgent to thoroughly review the pension and social security system. Today, this system has become too costly and inefficient, with €47 billion in management costs across all budget lines. This accounting madness must be stopped.

According to the Court of Auditors, France risks seeing its debt reach 130% of GDP. And France’s rating, which will be reassessed on May 31, could be a new warning. Today, France is among the highest-taxed countries in the world, and the richest 10% bear 52% of the tax burden. Yet, entrepreneurs and wealth creators are leaving, seeking more favorable conditions for economic growth.

We live under the illusion that a small portion of the population can support a system with gigantic management costs. But this is no longer sustainable. Tax discontent is real, and if structural reforms are not undertaken immediately, tax rebellion is inevitable. However, given the government’s latest proposals, it seems we are doomed to a series of new hidden taxes, such as an increase in inheritance tax. At this rate, net savings of €110 billion would be needed to rectify the situation. And this is possible, provided we reduce public spending and agree to work harder to revitalize the economy.

The debt burden will continue to grow, reaching nearly €100 billion per year by the end of the five-year term. And if this trend continues, the IMF could well find itself imposing reforms similar to those experienced in Greece: a 15 to 20% pension cut. This would spell the end of our national sovereignty.

France must act, and it must act quickly. Reducing the deficit is the top priority. Less growth means a larger deficit, and it is the work of the French people that will ultimately finance our social model. This will require a policy of far-reaching reforms and painful, but necessary, savings.

It is time to break free from denial and tell our citizens the truth. Magical debt is a myth, and it is urgent to put an end to this illusion. France must respect its citizens and present them with reality. We already understand the situation, and it is high time the government did the same.

©2025 – IMPACT EUROPEAN

About The Author

Jean-Luc GINDER Economiste

See author's posts