France is skint, but the French are in denial. To judge by the howls of outrage from the left and the hard right of the French political spectrum, you would think the prime minister, François Bayrou, had just taken a Javier Milei-style chainsaw to public services, announced Doge-style mass layoffs or imposed swingeing pay cuts.
But it was Bayrou’s suggestion that the French should give up two of their 11 cherished public holidays – Easter Monday and 8 May, the anniversary of the end of the second world war in Europe – and work instead to increase economic output and hence government revenue that provoked the anger.
Jean-Luc Mélenchon, the leader of the hard-left France Unbowed (LFI) party, accused the centrist prime minister of leading a “race towards an economic, financial and social abyss for the greater suffering of all”. The Socialist party leader, Olivier Faure, described the proposals as “a demolition plan for our French model”, and Jordan Bardella, president of the hard-right National Rally (RN), said the the proposal to cancel the two holidays was “a direct attack on our history”.
The hard left and the populist right threatened to bring down the government with no confidence motions in the autumn, when the budget will be put to a hung parliament, as they did with Bayrou’s short-lived predecessor, Michel Barnier, last year.
As is so often the case, the sound and fury in the echo chamber of French political rhetoric is out of all proportion to reality. Bayrou proposes a standstill in public sector pay, pensions, welfare benefits and tax thresholds in 2026, which, with inflation forecast to increase slightly to about 1.4% next year, means a modest erosion of living standards for most people and a slightly increased tax take. Better-off pensioners will pay more tax, poorer ones will pay less. The measures are supposed to reduce the deficit by €43.8bn to 4.6% of economic output next year. Only defence spending will be increased, in line with France’s commitment to Nato, given Europe’s deteriorating security situation.
This is hardly a draconian austerity purge for a country that had a deficit of 5.8% of GDP last year – the highest in the euro area – and which by most rational measurements is living beyond its means. National debt has risen to 113% of GDP, higher than any EU country except Greece and Italy. But while their debt piles are falling, France’s keeps on growing.
Public spending accounts for 56.5% of GDP in France, the second highest level in the EU after Finland. Despite the centrist president Emmanuel Macron’s intention to reduce the tax burden and get more French people into work when he took office in 2017, a series of crises – the revolt of the gilets jaunes against a carbon tax, the Covid-19 pandemic and the effects of Russia’s war in Ukraine – triggered more state expenditure. In 2023, France’s tax-to-GDP ratio was 43.8%, significantly higher than the average of 33.9% in advanced economies.
The country has too many layers of public administration, which together employ 5.8 million people – 20% of the total workforce. Bayrou proposed that one in three retiring civil servants should not be replaced, drawing immediate protests from trade unions representing teachers, health workers and the police.
Perhaps the most telling criticism came from Édouard Philippe, Macron’s first prime minister and a likely centrist presidential candidate, who said Bayrou’s package contained no structural reforms of failing public policies and was just an emergency plan to limit the damage without solving the problem.
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Axing a couple of public holidays would go some way towards narrowing the gap between the number of hours worked per inhabitant in France compared with competitors such as Germany, Italy, Spain and the UK – not to mention the United States or South Korea. But the French are militantly resistant to any attempt to remove acquired social rights, regardless of the economic situation, changing demography or dire public finances, as they showed with sustained social unrest over Macron’s raising of the retirement age to 64.
It’s not that French workers actually work much less than their European counterparts. But France has less of its population in employment because of a combination of earlier retirement, later entry into the labour market, higher unemployment and welfare dependency.
“The markets and the EU are watching us,” Pierre Moscovici, the president of the French court of accounts and a former finance minister and European commissioner, said after presenting an annual report that warned that the country’s debt was approaching a tipping point. “As demanding and difficult as it may be, getting our public finances under control from 2026 is imperative for debt sustainability,” he added.
France has long enjoyed the indulgence of bond market vigilantes because of its ability to raise revenue and a presumption that its debt was implicitly backed by Germany, since a French financial crisis would trigger severe turbulence in the eurozone. But several credit ratings agencies have recently lowered France’s sovereign rating because of a concern that the government will be unable to enact serious deficit-cutting measures without a parliamentary majority.
French people need to get real about their fiscal predicament before it descends into an acute crisis. So far there is little sign of that reality dawning on either the political class or the population. The left just keeps repeating that the government should soak the rich and reimpose a wealth tax, even though that would make little more than a symbolic dent in the deficit. The populist right argues that the state could save all the money it needs if only it stopped paying benefits to immigrants. Those numbers don’t add up either.
With so many politicians encouraging voters to go on believing that “public money” grows on trees or can be borrowed in unlimited amounts – Mélenchon has argued in the past that France should default on its debt – it is hard to have a rational debate on the budget.
The stage is set for another battle of wills in parliament, and probably in the street. If the uneasy grouping of centrist and conservative parties supporting Bayrou cannot get something resembling his proposed savings through the National Assembly this autumn, France may be plunged into a real financial crisis that could play into the hands of Marine Le Pen’s National Rally ahead of the next presidential election, due in 2027.