
France is going through an unprecedented budgetary crisis. The deficit risks slipping by more than 6% in 2024. France now risks bankruptcy, which would drag the entire euro zone into the abyss.

France: an abysmal budget hole
The French government faces a alarming financial situation. The deficit risks slipping by more than 6% in 2024forcing the executive to plan a budgetary effort of 60 billion euros for 2025. Despite this drastic measure, public spending will continue to increase by 2.1%.
This situation raises serious questions about the public finance management. Voices are being raised to point the finger at those responsible and to question possible cover-ups.
The finance committee of the National Assembly, chaired by Eric Coquerel, plans to transform itself into a commission of inquiry. The objective would be to understand how such a slippage could have occurred.
This approach underlines the extent of the crisis of confidence affecting the State's financial institutions.
A government under pressure
The solemn vote on the budget is scheduled for November 5. In this tense context, the Barnier government could be forced to resort to article 49.3 of the Constitution. This decision risks further weakening the executive, already in difficulty.
The government's credibility is under attack. Critics point directly Emmanuel Macron as responsible for debt. The president would have refused certain economic measures, particularly concerning retirees, for fear of electoral repercussions.
This situation highlights the tensions within the executive.
Controversial budget cuts
Faced with this crisis, the government is considering budget cuts in several sectors. Justice could see its budget cut by 500 million euros, a decision which arouses concern in an area already underfunded compared to European standards.
Local authorities are also in the sights. The government plans to ask them for an effort of around 20 billion euros, or a third of the total effort. However, the communities have not yet given their agreement, which suggests that difficult negotiations future.
The impact on public services
The budget crisis is already having concrete repercussions. THE gendarmes in the majority of municipalities in France no longer pay their rent, accumulating around 200 million euros in debt. This situation puts municipalities in difficulty and raises questions about the State's capacity to carry out its sovereign missions.
This problem is not new. In 2020, the slate even rose to 1 billion euros before being regularized. However, the recurrence of these payment delays highlights the structural difficulties of public finances.
Other public services could be affected. Late payments are being reported in various sectors, such as legal aid. This situation could quickly become untenable and lead to a deterioration of public services.
Financial markets facing the bankruptcy of France
Financial markets are starting to doubt the French financial solidity. The French spread has passed above that of Portugal and Spain. France now borrows at 5 years more expensive than Greece, a worrying sign of the perception of its economic health.
The credibility of the French word is at stake. If investors lose confidence in the information provided by the government, this could have dramatic consequences on borrowing rates and make the situation worse.
Rating agencies are closely monitoring the situation. A downgrade of France's rating could have catastrophic consequences on its ability to borrow and on the cost of its debt.
A system running out of steam?
The euro system allowed France to continue to borrow despite its structural weaknesses. But with Germany itself in difficulty, this mechanism may have reached its limits.
This analysis raises questions about the long-term viability of the European Economic and Monetary Union. If France, the second largest economy in the euro zone, were to experience serious difficulties, the entire European structure could be threatened.
The real problem: pensions
A significant part of the problem lies in the pension financing. Pension costs have increased significantly over the years, going from 36.5% of GDP to 57% of GDP.
This situation raises the question ofintergenerational equity. Today's assets find themselves in a delicate position, having to finance a system from which they may not benefit in the future. Projections indicate that by 2055, pensions may have lost 40% of their value.
Despite the urgency of the situation, the government seems reluctant to tackle this problem head-on, fearing electoral repercussions. However, this inaction could worsen the situation in the long term.
Too many civil servants in France?
Civil service management is also at the heart of the debates.
Accusations of clientelism are regularly brought against the territorial civil service. The creation of poorly productive public jobs is pointed out as a means of maintaining a form of social peaceto the detriment of economic efficiency.
This situation raises the question of state reform and its structures. A reduction in the number of civil servants could generate substantial savings, but faces political and union resistance.
Increasingly poor French people
The consequences of this budgetary crisis are beginning to be felt in the daily lives of the French. We observe a decline in meat consumptionwhich some attribute to ecological or health concerns, but which could actually be the result of financial constraints.
Likewise, the reduction in energy consumption, presented as an ecological success, could simply be thee reflection of the growing economic difficulties of the population. These developments demonstrate a deterioration of the standard of living that the government struggles to recognize.
The bankruptcy of France
The current situation is reminiscent of that of 2010, when François Fillon declared that he was leading “a failed state”. The deficit forecast for 2024 (6.1%) is the highest since this period.
The question that now arises is whether how far economic chaos can go before a revolution breaks out. The sacrifices to come could be brutal, with significant social consequences.
The Greek experience could provide insight into the social consequences of such a crisis. However, France, as the second largest economy in the Eurozone and a major military power, could not suffer the same type of external intervention as Greece.
The role of the European Union
The European Union has played a crucial role in the maintenance of French financial stability over the last decade. The policies of the European Central Bank (printing money), notably the Quantitative Easing, allowed France to benefit from historically low interest rates.
However, this mechanism seems to have reached its limits. With the rise in interest rates and Germany's economic difficulties, France finds itself once again exposed to the realities of its financial situation.
This development raises the question of sustainability of the European project in its current form. A major crisis in France could have repercussions on the entire euro zone and call into question the very foundations of the Economic and Monetary Union.
France finds itself at a critical turning point. The choices that will be made in the months to come will be decisive not only for the future of France, but also for that of the European Union. in its entirety. Faced with the scale of the challenges, a major overhaul of the French social and economic model seems inevitable.
Maximize your Tremplin.io experience with our 'Read to Earn' program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.