Why France is stuck

{"text":[[{"start":5.28,"text":"Sitting in Paris bracing for the next French political crisis, I found a strangely fascinating table from the IMF. It gives government spending as a percentage of GDP for dozens of countries. Clustered at the top are several isolated microstates: Kiribati, the Marshall Islands, Dominica and Micronesia. Counting only countries with populations over 150,000, the biggest spender was Ukraine, at 74 per cent of GDP. Fair enough — it’s fighting an invasion. But next in the table, at a stonking 57 per cent, is a country at peace (except with itself): France."}],[{"start":50.71,"text":"That number underlies the crisis. With France’s budget deficit hitting 5.8 per cent of GDP, François Bayrou, the fourth prime minister since 2024, wants to cut €44bn from the ever-expanding budget. Since parliament won’t let him, he’ll probably lose a vote of confidence on Monday. Then on Wednesday, protests and strikes aim to “block” an already blocked country. Why can’t France spend less? And where might this end?"}],[{"start":81.56,"text":"Contrary to popular belief, France’s state wasn’t always massive. At liberation in 1944, many people lived on farms without even rudimentary public services, such as electricity or running water. Pensions used to be ungenerous. In 1970, the effective average age of retirement was 68, exactly the age at which the average French man (in an era when most workers were men) died. In 1995, six governments of developed countries were higher spenders than France."}],[{"start":null,"text":"

Macron’s remark after taking office that France was not ‘reformable’ appears correct

"}],[{"start":119.41,"text":"Then, when the euro arrived in 2002, French politicians calculated that with the European Central Bank printing their money, they could spend with impunity. The prodigality peaked in pensions: French retirement now averages 25 years, about the longest in human history. But spending is also relatively high on health, infrastructure in cities (though not in France’s vast countryside), and — oddly for an obsessively over-centralised country — on local civil servants. Meanwhile, France’s private sector has borrowed merrily too."}],[{"start":154.6,"text":"French politics is personalised around the figure of the president. After the former Rothschild banker Emmanuel Macron got the job in 2017, the word “neoliberal” pervaded French discourse. France is now routinely described as a “neoliberal wasteland”, its state supposedly slashed by Thatcherites. In the new post-truth era, other absurd beliefs went mainstream, such as the notion that France was uniquely cursed (as witness world-leading French pessimism in opinion polls) or that it was heading for racial civil war."}],[{"start":194.49,"text":"Then, from 2022, global interest rates rose, punishing spendthrift states. France’s 10-year borrowing costs have jumped to 3.5 per cent, similar to Greece and Italy, albeit below the US and UK. In fact, as so often, France’s dysfunction mirrors Britain’s. One reason the two states have been co-operating on defence is that neither has the money to act alone. It’s like two small companies merging to survive in international markets."}],[{"start":228.03,"text":"Because France overspends domestically, it can’t afford to help Europe resist Vladimir Putin. Its defence budget is still only 2 per cent of GDP. I recently visited a weapons factory that makes surveillance drones. I imagined it was producing thousands, but was told, “The French military has 14.”"}],[{"start":247.67000000000002,"text":"How to cut other spending? Bayrou’s people are trying to persuade opposition parties by trumpeting the improbable claim that the IMF might intervene. The opposition agrees that the debt should fall, but not on any actual measures to make that happen. That’s partly because both main opposition parties are economically far left: Jean-Luc Mélenchon’s La France Insoumise, and Marine Le Pen’s Rassemblement National, which is far right only on immigration and culture wars. Both parties aspire to drive the deficit even higher by lowering the retirement age back from 64 (to which Macron raised it) to 62 or even 60."}],[{"start":292.76,"text":"Cutting spending would require compromise. But that’s now unthinkable in French politics. Macron’s remark after taking office that France was “not reformable” appears correct. The likelihood is continued stasis, with French debt climbing further from today’s 116 per cent of GDP. Debt-servicing costs, already the budget’s single biggest item at an expected €66bn this year, have begun crowding out other spending. Further downgrades by rating agencies would push up borrowing costs."}],[{"start":327.61,"text":"The traditional forecast is that the far right will win the presidency in 2027, possibly precipitating a debt crisis. I’ve always doubted that: France’s political saving grace is that the far left and notional far right still loathe each other. But an accident is becoming ever more likely."}],[{"start":349.34000000000003,"text":"Find out about our latest stories first — follow FT Weekend Magazine on X and FT Weekend on Instagram"}],[{"start":363.42,"text":""}]],"url":"https://audio.ftmailbox.cn/album/a_1757030309_9119.mp3"}