The spectacular – yet not totally unexpected – collapse of Francois Bayrou’s government is the latest chapter in a political quagmire that has dogged France ever since Emmanuel Macron’s centrist bloc failed to secure an absolute majority during the 2022 legislative elections. The impasse devolved into a full-blown crisis in 2024 when the French President—bewilderingly—called a snap election, yielding the most fractured Parliament in modern French history.

Yet fragmentation alone need not have made the country ungovernable. Unfortunately, France lacks a tradition of coalition governing that solves this issue in other Western democracies. But the true issue lies beyond politics: France has become hopelessly addicted to living beyond its means and financing this excess through debt. The only way out would be for a significant portion of the country’s political class to look French voters in the eye and tell them it’s time to get off the gravy train.

Needless to say, this crisis isn’t going anywhere nice.

France has consistently spent more than it raises in revenue since the early 1970s.  As its debt continues to rise (now 114% of GDP), Paris will find it harder to sustain its increasing debt servicing costs. A vicious spiral that is exacerbated by anaemic growth (0.6% projected for 2025) and the highest proportion of public spending relative to GDP (57%) in the entire EU. Paris now pays more than Athens when borrowing on the financial markets. Remarkably, France now spends more every year paying interest on its colossal debt than it does on defence.

Although some political leaders have shown a commitment to bringing France’s public finances under control, notably Interior Minister Bruno Retailleau, the loudest voices are those of the extremists; both Jean-Luc Mélenchon’s LFI and Marine Le Pen’s RN call for repealing the recent reform which raised the retirement age to 64 (from 62, with LFI even saying it should actually be lowered to 60). This stunning proposal comes even though life expectancy is at a historic high, and the cost of pensions is spiralling out of control and will only get worse given the top-heavy nature of France’s demographic pyramid. France’s situation is uniquely bad because of its bloated state and chronic overspending. It is also impressive because of its current political woes. But while the root cause is not unique to France, the fact that France is the second largest economy in the Eurozone means its lack of economic credibility on debt reduction could have potentially ruinous implications for other Euro members.

And just to be clear – France currently has no credible plan for reducing its deficit. Forget a balanced budget, French policymakers can’t even agree on a framework to get the budget deficit down to 3% by 2030.

The broader lessons for the rest of the Eurozone (and the EU) are clear. High taxes and low growth are a threat to European welfare as a collective. Europeans should view recent events in France as a warning and take a hard look at how they can stabilise their balance sheets. This is especially vital as exogenous pressures from Russia and other hostile actors will necessarily mean an increase in defence spending, at the expense of other areas, at least until growth can be revitalised.

For politicians, it is also vitally important to acknowledge how the constraints imposed by high public debt impact other vital societal priorities such as education, health and housing.  Yet, France remains an incredibly wealthy European state with very considerable financial reserves. French households alone hold over 600 billion euros in Livret A, the most common savings accounts in the country, while gross domestic savings total over 20% of GDP.

France’s problem isn’t a lack of money – it’s a decades-long ritual of concentrating debt at the public level. Public spending which is no longer sustainable.

France is not the “New Sick Man of Europe”; it has simply caught the worst case of a common ailment. To save the patient, let’s follow the science: cut unproductive, runaway spending and instead focus on delivering growth.