France is drifting into a Greek-style crisis

September 11, 2025

Like a rudderless ship, France is sailing straight for the same cliffs that broke the Greek economy 15 years ago. Will President Macron meet his Waterloo in the hallowed hallways of the IMF?

By Sven R. LARSON

Join us on Telegram , Twitter, and VK .

Contact us: info@strategic-culture.su

The fiscal crises are lining up across Europe like a string of rotting tomatoes: Germany, Slovakia, Romania; up north, Finland and Sweden are in deep trouble.

So is France. As public finances rapidly deteriorate, the political crisis that has metaphorically decapitated one prime minister after the other in recent years is now merging with an economic crisis. The result could be worse for the French people than any domestic crisis in decades.

As far as the political side of the crisis is concerned, our expert on French politics, Hélène de Lauzun, spells it out:

Following the vote of no confidence against [Prime Minister] François Bayrou, which was passed by a large majority on Monday, September 8th, France once again finds itself without a government. This is the third time in a year that President Macron has been faced with the now almost impossible task of finding a prime minister who is not likely to be overthrown at the first opportunity by opposition MPs.

Emphasizing the gravity of the crisis, de Lauzun draws an ominous historical parallel:

This is the first time in the Fifth Republic that two successive governments have been overthrown. The 1958 constitution was designed by General de Gaulle precisely to avoid this scenario, which was common under the Third and Fourth Republics. History repeats itself, for the worse.

To make matters even worse than they were in pre-1958 France, the prime ministers of the 21st century have to find a way to solve the most insoluble fiscal problem of our time: how to fund a welfare state that provides housing subsidies, health care, social benefits, and other tax-paid goodies to large swaths of the population.

As demonstrated first and foremost by Germany, but also to a significant degree by other EU states, the welfare state traps the government in an impossible relationship to its own constituents:

On the one hand, the benefits provided by the welfare state have a buy-your-vote function in that recipients are more inclined to vote for politicians who promise more benefits, or—in times of crisis—vow to not cut them;
On the other hand, once the welfare state drives total government spending above 40% of GDP, the economy slows down permanently and is structurally unable to afford the welfare state.

As the weight of the welfare state slows down economic growth, politicians have to dig deeper and deeper into the layers of taxpayers to find new revenue. The more they tax, the more the economy slows down; the funding of the welfare state becomes a vicious circle that lawmakers become trapped in—so long as they promise to keep the welfare state.

Many French analysts and commentators are pointing to the economic side of the crisis, but few have grasped the gravity of the situation. Writing for Fondation iFRAP, Samuel-Frédéric Servière goes into great detail about the government’s “persistent and high public deficits” and how these are driven by increases in “core” spending. This term, not generally used in this context, refers to the kind of entitlement spending that is symptomatic of a welfare state.

Downstream from Servière we find Member of the European Parliament Sarah Knafo, the only MEP from Éric Zemmour’s right-wing nationalist Reconquête party. In line with Servière’s focus on the government’s fiscal situation, Knafo proposes a package of spending cuts that, she claims, would not deprive the recipients of welfare-state benefits of any money. Her list adds up to €63 billion in cuts; a welcome contribution, it nevertheless falls short of the consolidated government’s deficit of more than €169 billion (in 2024).

There is another problem with Knafo’s list. It misunderstands the nature of the fiscal crisis. Even if implemented, her spending cuts would become irrelevant over time. They are designed to address wasteful spending, but this is not a wasteful-spending crisis. This is a crisis originating in the construction of an ideologically motivated system of government programs. These programs dole out cash or provide in-kind services to tens of millions of Frenchmen for no other reason than that they are deemed ‘entitled’ to those services.

So long as entitlement programs are kept modest in size, e.g., confined to public education and not much more, taxpayers can with relative ease foot the bill. But when these programs grow to such proportions that they take over the government budget, even eating into significant portions of the entire economy, then the end result is exactly what we now see unfolding in France.

The current political crisis is both entertaining and tragic, but it is nothing compared to what is coming down the pike. Very few observers understand this, with one illuminating exception. On September 1st, a week before Prime Minister Bayrou’s parliamentary confidence vote, Agnès Verdier-Molinié, Director of Fondation iFRAP, made an ominous but well-founded prediction:

Politicians can say what they want, but if they refuse to wake up and prevent France from going bankrupt, others will have to take care of it for them. It will be the ECB or the IMF, it doesn’t matter, but it will be much tougher in terms of measures, and the French political class will bear the responsibility for decades.

This is a thinly veiled reference to the horrific experience that Greece had 15 years ago when the country went into de facto receivership with the IMF, the ECB, and the EU—known at the time as ‘the troika.’ What followed for the Greek people was nothing short of a macroeconomic massacre, the grueling details of which I have chronicled both in an essay for the Center for Freedom and Prosperity and in an article in the Journal of Management Policy and Practice (Issue 1, 2019).

The details of the Greek experience are important, if for no other reason than as a stark reminder of what happens when a country has mismanaged its public finances far enough. However, the political consequences are of at least the same dignity. Under budgetary dictates from the IMF, the ECB, and the EU, the Greek parliament effectively suspended democracy for an extended period of time; regardless of the outcome of elections, the creditors had the final say in who would govern Greece.

All legislation of any consequence to the country was also conditioned on approval by the ‘creditor troika.’ Budget details as minute as the level of unemployment benefits, or what schools should be open and which ones should close, or the number of beds in the nation’s hospitals were subject to their fiscal scrutiny.

I doubt that France would ever be subjected to the same unmitigated humiliation that the ‘troika’ forced upon Greece; for one, the mere size and prominent political influence of the French nation and its government would prevent such a scenario. At the same time, I wholeheartedly agree with Agnès Verdier-Molinié on the risk for a full-blown fiscal crisis in France. When that crisis explodes, the National Assembly in Paris will have to give up its autonomy, especially on matters of taxes and spending.

Perhaps the biggest humiliation of them all will befall President Macron. When international investors lose faith in French government debt, Mr. Macron will have to beg on his bare knees for the IMF and the ECB to buy the debt that the market shuns.

They will hear his pleas—and present their demands with their cash pledges.

But how likely is this scenario?

It is always difficult to predict fiscal crises. I have devoted a good part of my research as a Ph.D. economist to this very question, and the best I can say is that “it depends” (the standard economist answer to all questions). However, Verdier-Molinié’s outlook is corroborated by hard facts.

Economically speaking, France has one of the absolute biggest governments in Europe and, thereby, in the world. Figure 1 reports total, consolidated government spending as a share of GDP (gray columns). To highlight the problem with the welfare state, it also presents total welfare-state spending as a share of GDP (red):

Figure 1

Source of raw data: Eurostat

The message in Figure 1 is unmistakable: for every €100 in productive activity in the French economy—consumption, investments, foreign trade, value added in industrial production, and so on—a full €40 is used by government for the purposes of economic redistribution.

This means that French politicians consider the activity of taking from Pete and giving to Paul a national priority and by far the most important mission of government. Figure 2 breaks down in detail what the welfare state’s outlays consist of and just how much of the whole cake of government spending those outlays claim (red slices) compared to core government spending (gray) and other, secondary programs (green):

Figure 2

Source of raw data: Eurostat

Of €10 spent by central, regional, and local governments in France, €7 goes toward health care, housing programs, social benefits, education, and recreational services. This makes France one of only seven EU member states where the welfare state claims more than 70% of total government spending.

It is also worth noting that for every €1 that the French government spends on its military, it doles out more than €21 on the welfare state. While not the highest discrepancy in Europe, it still shows a policy priority that contrasts notably with President Macron’s often-heard rhetoric on continued support for Ukraine in its war with Russia.

In short, France’s political leadership has cemented the ideological preferences behind the welfare state into the very fiscal structure of government. This structure severely weakens the government’s ability to do its job.

As if to compound their own recklessness in governing France, the political leadership has created a political crisis by banning the formation of a politically sustainable government. When the urgency of the government’s finances should be the guiding principle for forming a government, President Macron’s overarching criterion for selecting the next sacrificial lamb, i.e., prime minister, is his eclectic desire to keep Rassemblement National out of political influence.

It looks more and more as though the approaching fiscal crisis will be Macron’s own Waterloo. At that point, France will be hurled into a combined economic and fiscal crisis of a kind that should worry not only the French people but also the rest of Europe.

Original article: The European Conservative

The views of individual contributors do not necessarily represent those of the Strategic Culture Foundation.

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France is drifting into a Greek-style crisis

Like a rudderless ship, France is sailing straight for the same cliffs that broke the Greek economy 15 years ago. Will President Macron meet his Waterloo in the hallowed hallways of the IMF?

By Sven R. LARSON

Join us on Telegram , Twitter, and VK .

Contact us: info@strategic-culture.su

The fiscal crises are lining up across Europe like a string of rotting tomatoes: Germany, Slovakia, Romania; up north, Finland and Sweden are in deep trouble.

So is France. As public finances rapidly deteriorate, the political crisis that has metaphorically decapitated one prime minister after the other in recent years is now merging with an economic crisis. The result could be worse for the French people than any domestic crisis in decades.

As far as the political side of the crisis is concerned, our expert on French politics, Hélène de Lauzun, spells it out:

Following the vote of no confidence against [Prime Minister] François Bayrou, which was passed by a large majority on Monday, September 8th, France once again finds itself without a government. This is the third time in a year that President Macron has been faced with the now almost impossible task of finding a prime minister who is not likely to be overthrown at the first opportunity by opposition MPs.

Emphasizing the gravity of the crisis, de Lauzun draws an ominous historical parallel:

This is the first time in the Fifth Republic that two successive governments have been overthrown. The 1958 constitution was designed by General de Gaulle precisely to avoid this scenario, which was common under the Third and Fourth Republics. History repeats itself, for the worse.

To make matters even worse than they were in pre-1958 France, the prime ministers of the 21st century have to find a way to solve the most insoluble fiscal problem of our time: how to fund a welfare state that provides housing subsidies, health care, social benefits, and other tax-paid goodies to large swaths of the population.

As demonstrated first and foremost by Germany, but also to a significant degree by other EU states, the welfare state traps the government in an impossible relationship to its own constituents:

On the one hand, the benefits provided by the welfare state have a buy-your-vote function in that recipients are more inclined to vote for politicians who promise more benefits, or—in times of crisis—vow to not cut them;
On the other hand, once the welfare state drives total government spending above 40% of GDP, the economy slows down permanently and is structurally unable to afford the welfare state.

As the weight of the welfare state slows down economic growth, politicians have to dig deeper and deeper into the layers of taxpayers to find new revenue. The more they tax, the more the economy slows down; the funding of the welfare state becomes a vicious circle that lawmakers become trapped in—so long as they promise to keep the welfare state.

Many French analysts and commentators are pointing to the economic side of the crisis, but few have grasped the gravity of the situation. Writing for Fondation iFRAP, Samuel-Frédéric Servière goes into great detail about the government’s “persistent and high public deficits” and how these are driven by increases in “core” spending. This term, not generally used in this context, refers to the kind of entitlement spending that is symptomatic of a welfare state.

Downstream from Servière we find Member of the European Parliament Sarah Knafo, the only MEP from Éric Zemmour’s right-wing nationalist Reconquête party. In line with Servière’s focus on the government’s fiscal situation, Knafo proposes a package of spending cuts that, she claims, would not deprive the recipients of welfare-state benefits of any money. Her list adds up to €63 billion in cuts; a welcome contribution, it nevertheless falls short of the consolidated government’s deficit of more than €169 billion (in 2024).

There is another problem with Knafo’s list. It misunderstands the nature of the fiscal crisis. Even if implemented, her spending cuts would become irrelevant over time. They are designed to address wasteful spending, but this is not a wasteful-spending crisis. This is a crisis originating in the construction of an ideologically motivated system of government programs. These programs dole out cash or provide in-kind services to tens of millions of Frenchmen for no other reason than that they are deemed ‘entitled’ to those services.

So long as entitlement programs are kept modest in size, e.g., confined to public education and not much more, taxpayers can with relative ease foot the bill. But when these programs grow to such proportions that they take over the government budget, even eating into significant portions of the entire economy, then the end result is exactly what we now see unfolding in France.

The current political crisis is both entertaining and tragic, but it is nothing compared to what is coming down the pike. Very few observers understand this, with one illuminating exception. On September 1st, a week before Prime Minister Bayrou’s parliamentary confidence vote, Agnès Verdier-Molinié, Director of Fondation iFRAP, made an ominous but well-founded prediction:

Politicians can say what they want, but if they refuse to wake up and prevent France from going bankrupt, others will have to take care of it for them. It will be the ECB or the IMF, it doesn’t matter, but it will be much tougher in terms of measures, and the French political class will bear the responsibility for decades.

This is a thinly veiled reference to the horrific experience that Greece had 15 years ago when the country went into de facto receivership with the IMF, the ECB, and the EU—known at the time as ‘the troika.’ What followed for the Greek people was nothing short of a macroeconomic massacre, the grueling details of which I have chronicled both in an essay for the Center for Freedom and Prosperity and in an article in the Journal of Management Policy and Practice (Issue 1, 2019).

The details of the Greek experience are important, if for no other reason than as a stark reminder of what happens when a country has mismanaged its public finances far enough. However, the political consequences are of at least the same dignity. Under budgetary dictates from the IMF, the ECB, and the EU, the Greek parliament effectively suspended democracy for an extended period of time; regardless of the outcome of elections, the creditors had the final say in who would govern Greece.

All legislation of any consequence to the country was also conditioned on approval by the ‘creditor troika.’ Budget details as minute as the level of unemployment benefits, or what schools should be open and which ones should close, or the number of beds in the nation’s hospitals were subject to their fiscal scrutiny.

I doubt that France would ever be subjected to the same unmitigated humiliation that the ‘troika’ forced upon Greece; for one, the mere size and prominent political influence of the French nation and its government would prevent such a scenario. At the same time, I wholeheartedly agree with Agnès Verdier-Molinié on the risk for a full-blown fiscal crisis in France. When that crisis explodes, the National Assembly in Paris will have to give up its autonomy, especially on matters of taxes and spending.

Perhaps the biggest humiliation of them all will befall President Macron. When international investors lose faith in French government debt, Mr. Macron will have to beg on his bare knees for the IMF and the ECB to buy the debt that the market shuns.

They will hear his pleas—and present their demands with their cash pledges.

But how likely is this scenario?

It is always difficult to predict fiscal crises. I have devoted a good part of my research as a Ph.D. economist to this very question, and the best I can say is that “it depends” (the standard economist answer to all questions). However, Verdier-Molinié’s outlook is corroborated by hard facts.

Economically speaking, France has one of the absolute biggest governments in Europe and, thereby, in the world. Figure 1 reports total, consolidated government spending as a share of GDP (gray columns). To highlight the problem with the welfare state, it also presents total welfare-state spending as a share of GDP (red):

Figure 1

Source of raw data: Eurostat

The message in Figure 1 is unmistakable: for every €100 in productive activity in the French economy—consumption, investments, foreign trade, value added in industrial production, and so on—a full €40 is used by government for the purposes of economic redistribution.

This means that French politicians consider the activity of taking from Pete and giving to Paul a national priority and by far the most important mission of government. Figure 2 breaks down in detail what the welfare state’s outlays consist of and just how much of the whole cake of government spending those outlays claim (red slices) compared to core government spending (gray) and other, secondary programs (green):

Figure 2

Source of raw data: Eurostat

Of €10 spent by central, regional, and local governments in France, €7 goes toward health care, housing programs, social benefits, education, and recreational services. This makes France one of only seven EU member states where the welfare state claims more than 70% of total government spending.

It is also worth noting that for every €1 that the French government spends on its military, it doles out more than €21 on the welfare state. While not the highest discrepancy in Europe, it still shows a policy priority that contrasts notably with President Macron’s often-heard rhetoric on continued support for Ukraine in its war with Russia.

In short, France’s political leadership has cemented the ideological preferences behind the welfare state into the very fiscal structure of government. This structure severely weakens the government’s ability to do its job.

As if to compound their own recklessness in governing France, the political leadership has created a political crisis by banning the formation of a politically sustainable government. When the urgency of the government’s finances should be the guiding principle for forming a government, President Macron’s overarching criterion for selecting the next sacrificial lamb, i.e., prime minister, is his eclectic desire to keep Rassemblement National out of political influence.

It looks more and more as though the approaching fiscal crisis will be Macron’s own Waterloo. At that point, France will be hurled into a combined economic and fiscal crisis of a kind that should worry not only the French people but also the rest of Europe.

Original article: The European Conservative