‘France, truly, is on the brink’ and just days away from a make-or-break moment in its debt crisis, analyst warns, as protests turn into riots

Nationwide protests over the high cost of living roiled France on Saturday, adding to turmoil over public spending and debt ahead of a critical vote in the National Assembly.

Rioting broke out in some cities as luxury boutiques and supermarkets were looted while public buildings were defaced and even set on fire.

That followed mass demonstrations earlier this month, with students decrying run-down classrooms, missing teachers, and buildings that aren’t equipped for rising temperatures.

Protestors blamed years of underinvestment in public education.

At the same time, France’s looming debt has sent bond yields to the highest levels in 24 years, flashing warning signs not seen since the eurozone debt crisis in 2011.

With far-right and far-left candidates in the lead to become France’s next president in the spring, markets are losing confidence that either side will take the painful steps necessary to rein in the deficit.

For Mujtaba Rahman, managing director for Europe at Eurasia Group, France is suffering from a crisis of liberal democracy, a crisis of fiscal mismanagement, and a crisis of youth disaffection.

“But the fiscal crisis is the most dangerous, underlying many of the country’s woes and threatening to bring it to ruin,” he wrote in a New York Times op-ed on Thursday.

“France, truly, is on the brink.” The crises are also related to each other.

For instance, Rahman pointed out that while France’s education spending tops the European Union average, more than a quarter of the money pays for pensions of retired teachers.

Nobel laureate Paul Krugman similarly drew a straight line from France’s retirement largesse to the student unrest.

Due to its very generous government pension plan, education spending has suffered, meaning France is effectively subsidizing older French at the expense of everyone else, he wrote in a Substack post last week.

France’s public debt is now a record $4 trillion, or 119% of GDP—the highest ratio since the immediate aftermath of World War II.

While the pandemic as well as the Ukraine and Iran wars worsened France’s fiscal picture, President Emmanuel Macron has also pulled back from reforms meant to rein in the debt.