France barrels toward chaos as its public debt spirals out of control

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In scheduling a Sept. 8 confidence vote on his government’s proposal to cut €44-billion (approximately $70-billion) from its 2026 budget, beleaguered French Prime Minister François Bayrou gave lawmakers an ultimatum. They could, he said, “choose between chaos and responsibility.”

Presumably, he meant the former is what awaits France if his government falls next month. Yet, with labour and the left already vowing to shut down the country to protest Mr. Bayrou’s proposed cuts, the French autumn promises to be chaotic whichever way the confidence vote goes.

As it stands, Mr. Bayrou’s nine-month-old government appears doomed. The far-left France Unbowed and far-right National Rally are both vowing to vote against his budget plan on Sept. 8. If the centre-left Socialists join them, as is likely, Mr. Bayrou will be out of his job.

President Emmanuel Macron could then name a new prime minister – the country’s fifth since 2022 – or dissolve the National Assembly to hold new legislative elections barely a year after French voters last went to the polls. Neither option would solve the political mess that Mr. Macron has created during his second, and final, term in office.

It is hard to see how a new PM, or at least one acceptable to the deeply unloved Mr. Macron, would fare any better than Mr. Bayrou, who himself holds the record as the most unpopular prime minister of the Fifth Republic. But nor would another election break the country’s political deadlock. The 2024 election produced a hung parliament, and another vote this soon likely would, too.

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France, in short, is stuck. And the consequences, for all of Europe, could be devastating.

Mr. Bayrou’s Finance Minister, Éric Lombard, was forced to walk back comments he made in a Tuesday radio interview in which he warned of a bailout of France by the International Monetary Fund unless the country gets its €3.4-trillion ($5.5-trillion) public debt under control. He later posted on X that France is still able to borrow on financial markets “without difficulty.”

But that is mainly because of the implied backstop provided by the European Central Bank, which investors expect would rush to buy up French government bonds should Europe’s second-largest economy face anything approaching a liquidity crisis. France’s failure to get its fiscal house in order remains a major threat facing the euro. The European Commission last year ordered France to come up with a plan to bring its debt and deficit within the upper limits set by the European Union by 2029 or face financial penalties.

In 2023, Mr. Macron did push through reforms of the country’s costly pension system that included raising the retirement age to 64 from 62. But weeks of violent protests surrounding the move weakened the President’s resolve to go any further.

As a result, public spending, which had already topped 55 per cent of gross domestic product before the COVID-19 pandemic, stood at an unsustainable 57.2 per cent in 2024. The budget deficit hit 5.8 per cent of GDP last year, while the country’s gross debt soared to 113.2 per cent of GDP, up from 98 per cent in 2019.

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The French are also the EU’s most taxed citizens, with the average worker surrendering 54.4 per cent of their income to the state in 2024, according to L’Institut économique Molinari, a French think tank. Soaking the rich – the French left’s go-to solution – has been tried without success by previous governments. So, reining in the costs of the French welfare state is the only viable option.

Mr. Bayrou, a fixture of the French political scene for decades, volunteered to take on what he called “a Himalaya of difficulties” in putting France’s budget on track after his predecessor Michel Barnier’s government fell in December after proposing its own spending cuts.

But the budget measures Mr. Bayrou tabled in July proved to be equally unpopular – none more so than his proposal to eliminate two statutory holidays. The political opposition immediately seized on the horrible unfairness of asking the French to work more for the same pay.

The French value their leisure time and Mr. Bayrou’s suggestion they give up a bit of it amounted to a declaration of war. France Unbowed joined activist groups united under the “Bloquons tout” (Block Everything) banner by calling for a general strike on Sept. 10.

Mr. Bayrou, who needed Mr. Macron’s approval to call Sept. 8’s extraordinary sitting of the National Assembly, has sought to defuse the threat of a country-wide shutdown by putting his government on the line. “Is there or is there not a national emergency to rebalance our public accounts and escape, because there is still a possibility, the curse of overindebtedness?” the Prime Minister said in framing the question facing lawmakers.

There is little prospect that he will like their answer.