The Weight of Excess Spending

France, the world's seventh-largest economy, is at a critical juncture in its fiscal history. With public debt exceeding 110% of its GDP, the country faces a structural challenge exacerbated by decades of excessive public spending. In a context of geopolitical tensions, persistent inflation, and social pressures, the sustainability of French finances is in question. This article explores the roots of the problem, its recent evolution, and potential repercussions, based on data and analysis updated to 2025.

The Roots of the Problem: An Unsustainable Spending Model

Excessive public spending has been the main driver of French indebtedness. Since the 2008 financial crisis, France has run chronic budget deficits, fueled by a generous welfare state that includes pensions, healthcare, and social benefits. In 2024, public spending represented around 57% of GDP, one of the highest levels in the OECD, surpassing even countries like Sweden and Denmark in relative terms.

This model, inherited from Keynesian policies and expanded during the COVID-19 pandemic, has generated a vicious cycle. Emmanuel Macron's government, now facing post-election uncertainty in 2024, has prioritized economic stimulus and social measures to maintain cohesion, but at the cost of accelerated debt. For example, the post-pandemic recovery plan, financed largely by debt, raised the deficit to 6% of GDP in 2020-2021, a level that has not decreased significantly.

The Current Situation: Alarming Figures in 2025

As of October 2025, French public debt will reach €3.1 trillion, equivalent to 112% of GDP, according to estimates by the National Institute of Statistics and Economic Studies (INSEE). This ratio has increased by 2 percentage points in the last year alone, driven by a budget deficit projected at 5.3% for 2025, above the 3% limit established by the EU Stability and Growth Pact.

The excess spending is evident in key areas:

• Pensions and retirement benefits: They represent 14% of GDP, with insufficient reforms that fail to contain population aging.
• Healthcare and social protection: Expenditures have grown by 4% annually, exacerbated by inflation in medical costs.
• Green Investments and Defense: Under pressure from the ecological transition and the war in Ukraine, France has increased military spending by 7% by 2025, adding an additional €50 billion.

The European Union opened an excessive deficit procedure against France in July 2024, demanding cuts of €20 billion annually. However, the government has opted for a flexible "debt rule," drawing criticism from Brussels and tensions with partners like Germany.

Economic and Social Consequences: A Systemic Risk

Chronic indebtedness is not just a number on a balance sheet; it has profound impacts. First, debt service already consumes 4% of the national budget, equivalent to €150 billion per year, diverting resources from productive investments such as education and infrastructure. With interest rates hovering around 3% for 10-year bonds, any further increase—possible in a global inflation environment—could trigger these costs.

Economically, France faces a rising risk premium: the spread between French and German bonds has reached 80 basis points by 2025, a sign of investor distrust. This could lead to a liquidity crisis similar to that of Greece in 2010, albeit on a larger scale given the size of the French economy.

Socially, excessive spending has eroded confidence. The "yellow vest" protests in 2018 and the strikes against pension reform in 2023 illustrate how the cuts needed to balance the books generate instability. In 2025, with GDP growth stagnating at 1.2%, the risk of recession is real, exacerbated by the reliance on debt to stimulate demand.

Possible Solutions: Painful Reforms or Innovation?

Addressing this problem requires a delicate balance between austerity and growth. Experts such as the IMF recommend a combination of:

• Structural reforms: Raising the retirement age to 64 and streamlining subsidies, potentially saving €30 billion annually.
• Increasing revenue: Raising taxes on large fortunes or digitizing the administration to reduce tax evasion, which amounts to €80 billion annually.
• Investment in productivity: Promoting innovation in AI and renewable energy to raise growth above 2%, organically reducing the debt-to-GDP ratio.

However, the post-2024 election political paralysis complicates implementation. The National Front and the radical left are pushing for more spending, while centrists are seeking European commitments. An optimistic scenario implies a stabilization plan agreed with the EU by 2026, but pessimism points to a debt spiral if no action is taken soon.

Conclusion: A Challenge for a United Europe

French debt is not just a national problem; it is a test for European integration. If France, a pillar of the EU, fails to rein in its excessive spending, it could trigger contagions in Italy or Spain, threatening the stability of the euro. The path forward demands political courage: cutting where it hurts, investing where it grows, and regaining the confidence of markets and citizens. Ultimately, excessive spending has been a temporary salve for structural ills; now, France must opt ​​for fiscal surgery to truly heal.

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