Fair Observer’s Editor-in-Chief, Atul Singh, and FOI Senior Partner Glenn Carle, a retired CIA officer who now advises companies, governments and organizations on geopolitical risk, discuss France’s deepening political and fiscal crisis. Protesters across France are demanding stronger public services while the heavily indebted state is struggling to sustain its existing commitments. With parliament paralyzed, borrowing costs rising and political extremes gaining ground, Atul and Glenn explore whether France can break this recurring cycle — and what failure could mean for next year’s presidential election and the future of the euro.

School protests and the wider revolt

Since mid-September, hundreds of thousands of demonstrators have marched through French cities such as Paris, Marseille, Lyon, Rennes and Toulouse to protest the government. On Saturday, October 25, the French Interior Ministry estimated the number of protesters to be 410,000 while the union organizers claimed 800,000. The government deployed 70,000 police and imposed restrictions in several cities.

The French government’s underinvestment in education triggered these protests. One sign captured the public sentiment: “Schools with no money, a country with no future.”

Initially, students led these protests. Now, parents, teachers and unions, as well as elements of the populist-left, have joined them. Rioting, arson and vandalism have accompanied the protests, and police have responded with tear-gas and baton charges. Authorities have jailed hundreds for criminal activity after fast-tracked court hearings. Prime Minister Sébastien Lecornu has accused the populist-left of fueling the violence, which the left denies vehemently. In turn, it blames the government for using protests to gain political advantage in next year’s elections.

Political extremes gain as the center falters

Amid the protests, on Sunday, October 25, far-right party Rassemblement National (RN) leader Marine Le Pen kicked off her presidential campaign in Orléans, the historic city in the heart of the Loire Valley. She is leading Jean-Luc Mélenchon of La France Insoumise, the left-wing party that holds second place. The traditional parties have imploded, the extremes have taken charge and political analysts increasingly worry about the future.

Orléans has immense historical significance in France. The city is associated with Jeanne d'Arc, better known in English as Joan of Arc, who is regarded as a patron saint of France. She is revered for her role in the siege of Orléans and securing the coronation of Charles VII of France during the Hundred Years' War. To this day, Jeanne d'Arc is honored as a defender of the French nation and Le Pen is portraying herself as a modern day heroine in the same tradition.

Le Pen is doing well because France is teetering at the brink. Politico journalists Giorgio Leali and Clea Cleacutt have declared France the “sickest man of Europe” trapped in “a vicious cycle of fiscal and social crises.” Protesters are calling for more public investment in schools and other public services precisely at a time when the government has no money. Since French President Emmanuel Macron held snap elections in 2024, the government has struggled to pass a budget in parliament.

Macron’s prime ministers have come and gone. Michel Barnier and François Bayrou did not survive long, lasting three and nine months, respectively. Macron’s lackey, Sébastien Lecornu, had to resign in 2025 and then return through the back door four days later. Three blocs in parliament cannot agree on much and political paralysis has crippled France.

Debt markets tighten the squeeze

France’s debt is about €3.5 trillion ($3.9 trillion), 119% of the GDP. Borrowing costs have risen to their highest level since 2008. The government spends more on interest payments than on defense or education. Lecornu’s budget for 2027 promises €54 billion ($60 billion) in savings but the deficit will remain over 5% of the GDP, well above the European Union’s 3% cap for budget deficits. Former Italian Prime Minister Mario Monti, who dealt with Italy’s debt crisis in 2011, points out that France has long been seen as the EU’s “spoiled child.”

During Monti’s time, the spread between Italian and German ten-year bonds shot up from around 150 basis points to more than 500 within a few months. The spread between French and German debt reached 177.7 basis points on October 22, its widest since November 2011 during the euro zone debt crisis. A basis point is one-hundredth of a percentage point, i.e. 0.01%. The same day, France’s benchmark ten-year yield was last up 6.5 basis points at 5.06%, after previously touching 5.1415%, its highest level since July 2002. Of all the G7 countries, France has suffered most from the debt sell-off triggered by the US/Israel–Iran War.

Now, the operative question is whether the European Central Bank (ECB) would intervene if bond markets lose confidence in France. Pro-Europeans are convinced that European institutions are now much stronger and the ECB will be able to save France, just as it saved Greece and Italy. Euroskeptics remain unconvinced. They think France is not too big to fail but too big to save, and could doom the euro. The currency has already fallen to a 17-month low against the dollar and elections next year could throw in a nasty surprise.

Painting a restless picture

What distinguishes this crisis from all previous ones, going back to the ancien regime? As it turns out, just about nothing. France has a brittle, top-down system that recurrently breaks. The country finds it difficult to reform and stays paralyzed in outdated structures. Dissatisfied citizens blame the state for a betrayal of the compact — underfunded schools, severe teacher shortages and crumbling infrastructure, cost-of-living, austerity versus “sovereignty” — while demanding that the state solve the problem by doing more of what it had been doing despite failing to do so.

The main difference with today’s crisis is this: the populist, anti-globalist, anti-social disruption from and reaction against labor mobility. People from poorer countries are coming to richer countries and France has many immigrants from both North and Sub-Saharan Africa. The likely outcome is that somehow the social unrest stops after the government makes gestures of minimal substantive impact. Then, the system would revert to an inter-unrest period status quo, followed by stasis. 

At the moment, the government can quell the unrest on the streets by enhancing security measures. It can also assuage public grievances. However, so far it has failed to do so. The one pledge the Lecornu government has made is to end Parcoursup university application procedures, which will come into effect after 2028. This pledge is practically substanceless.

The key challenge for France is that citizens refuse any change to the acquis sociaux, worker’s social rights. The country can no longer afford to pay for these rights. Without budget tightening and debt reduction, France will hurtle into a profound and prolonged economic crisis. Yet the French cannot look at reality in the face and reform. They want more from the state when the state has run out of money.

The far right and far left both are exploiting this crisis. The far right is likely to benefit, on balance, more than the far left. Will the crisis propel RN’s Le Pen to the presidency? Atul thinks it might. So far, the majority of French voters have opposed the far right but, as stated earlier, Le Pen now leads Mélenchon and we could enter a brave new world next year.

[Lee Thompson-Kolar edited this piece.]

The views expressed in this article/video are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.