2024 has seen a high degree of political instability in France, with four different prime ministers, the rise of the far-right, a snap election called by Macron in June, and a successful no-confidence vote passed in December by the left- and right-wings together. The political impasse led France not to pass a budget for the 2025 fiscal year, which has had to rely on an emergency clause in the law allowing the previous year’s spending. Right now, the new Prime Minister, François Bayrou, appointed by the President of the Republic Emmanuel Macron, faces two big challenges: cutting deficit spending, as requested by the European Union, and relaunching a stagnant economy.
The 3% problem
The EU requires its member states to keep deficit expenditure below 3% of the total GDP. Although this rule has been often questioned for being more political than economy-based, it is mandatory, and France should comply. Yet, this has been rarely the case.
In 2024 the French deficit was still around 6.1%, revealing how unsuccessful were attempts to reduce it as requested by Brussels. A budgetary equilibrium could have been targeted by taxing the rich and the multinational companies. Nevertheless, Macron pursued an opposite strategy favoring big companies and incomes, and trying to reduce social expenses,’ says economist Frédéric Lebaron. “This has nothing but worsened the structural weaknesses of French economy, already strongly hit by the 2008-2009 crisis.”
The specter of austerity
Tax cuts were accompanied by spending cuts on the welfare state and the social protection system. Lebaron argues that the very austerity pursued to lower the budgetary deficit without raising taxes not only failed to reduce the deficit but also affects the possibility of economic growth, as it creates a climate scaring French consumers.
“Consumption depends on collective psychology, so it is negatively affected by the perpetual instability in politics and the austerity policies, which keep creating decline and putting the welfare state under pressure,” he adds. “We’re losing our industrial base, and overall growth has been weak for many years: the only sector preserved by the crisis is the defense industry, which is not a good situation in terms of well-being.”
In the opinion of Lebaron “any reasonable economic forecast will have to consider political instability and uncertainty.” This is not just true for France but seems rather a European wide phenomenon. German economy, once the engine of the old continent does not grow, and in the future loom the threats of Russia and Trump’s presidency. ‘There are many issues related to the latter,’ states Lebaron, “such as a new protectionist wave or the fate of Greenland. Europe’s future is pretty foggy right now.”
An uncertain future for the youngest
These kinds of uncertainties seem to impact the psychological well-being not only of French consumers, but also of students. Lebaron, a professor at the renowned École Normale Supérieure in Paris–Saclay, has seen a rise in anxiety and psychological issues among those attending his classes. “Students are building their future career and have no established position; it is a phase of life defined by uncertainty and this is only worsened if the surrounding world becomes unstable too. As a sociologist I must say that it could also get worse depending on each student’s initial conditions, gender or background. We’ve for instance seen that young women are more affected by this climate of anxiety than young men.”
In the last years, unequal taxes, austerity, and climate have been the issues that brought many French citizens to the streets demonstrating against the government. Social conflict loomed all over the country. Today this could be different, not because the issues have been resolved, but because most of the time demonstrations did not bring any actual change, such as those relating to the reform raising the retirement age in 2023. Until there were demonstrations, French democracy, despite the political instability, seemed strong and fierce. As disillusionment paves the streets of Paris, even that becomes uncertain, adding more and more fears around the fate of one of the biggest world economies.
