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The facts are known and documented. Recently, the OECD, the Court of Auditors, and then the mission led by Xavier Jaravel, Xavier Ragot, Jean-Luc Tavernier, and Natacha Valla have laid out an unassailable assessment of France’s alarmingly precarious public finances. This text adds nothing to those works that inspired it. Instead, it seeks to develop an understanding of our situation that could be widely shared. A few months before a decisive presidential election, the goal is to propose an operational collective path to choose the recovery now and avoid enduring austerity soon. The analyses it contains are of course imperfect and may be challenged, but they enable a dialogue with everyone who sincerely wishes to preserve the capacity for democratic deliberation in France, so that tomorrow we can still make collective choices.
Doing More with Less
We must now do more together with less. It is frustrating, but it is the reality, and this frustration feeds anger, and often a form of radicalism, in a growing portion of our fellow citizens.
We must do a lot more, because we have to solve the problems of yesterday and today, notably restoring the republican promise of schooling and the excellence of our research, adapting the functioning of health care to the aging population, ensuring the operation of an increasingly strained justice system, reinventing the cohesion of territories and city centers, modernizing aging transport and energy infrastructures, and supporting agricultural transitions.
But we must also address the problems of today and tomorrow, such as the massive adaptation to climate change, the defense of our liberties on the continent, which requires building defense capabilities suited to new threats, restoring our technological competitiveness and ambitions in artificial intelligence and quantum computing, reindustrializing the country in a context of fierce competition with China and lasting tensions with the United States, fighting narco-crime that penetrates our society, and above all adapting to an inevitable demographic aging. It is easy to forget demographic realities because they are slow processes, but they are no less massive and their effects are real.
We now must do more together with less.
Stéphane Boujnah
Yet we must do a lot more with a lot less, because our capacity for collective choice, and therefore for public action, is diminishing. Our country, however, is the one that taxes the most among the 38 most developed nations on the planet, at nearly 44% of GDP, i.e., the wealth we create each year; and in the same group, it is also the one that allocates the largest share of GDP to public spending, more than 57%. Why, even though we tax more and spend more than others, do we fail to solve our problems of yesterday, today, and tomorrow? Because we have made collective choices, implicit or explicit, that create a deadlock.
Choosing the Future
We have collectively chosen the present over the future, that is, transferring income to the current generation rather than investing to prepare a better future for today’s young people and for future generations. We have, for example, preferred guaranteeing the progression of retirement pensions rather than preserving our capacity for space research. We have favored a generous sick-leave system at the expense of our medical research capabilities. We have grown accustomed to seeing a retired teacher receive a pension higher than that of a starting teacher.
We have preferred gradually building a consumer society rather than a nation of agile producers. Our choices for financing social protection, which mainly weigh on businesses and employees, the resigned acceptance of asymmetrical trade with China, and the abundance of regulations that burden industrial activities—these choices reveal a collective preference for cheap consumption over competitive production.
Our preference for the present has also fostered weak growth to which we seem to have become accustomed. Yet our model only functions sustainably if the growth of our economy outpaces that of our public expenditures. We have gradually become accustomed to funding, with other people’s money, choices we could no longer afford ourselves, i.e., borrowing the money we redistribute. People often say the French do not want to make sacrifices. That is false: there is a collective sacrifice we make, with method and consistency, the sacrifice of our children, to whom we leave each year a heavier debt and a smaller space for democratic deliberation to make their own choices tomorrow.
Our preference for the present has driven us to seek protection against external risks everywhere, and most often from the State. The euro largely frees us from the fear of devaluation and the decline in purchasing power it used to bring. The French also have the peculiarity of being relatively insensitive to rising interest rates: when they buy a home, they borrow at a fixed rate, unlike most European countries where mortgages are variable, so in France, rate hikes are primarily the lenders’ problem. We are also much more shielded than other countries from global inflation, thanks to generous public interventions, such as the energy shield. We have thus created conditions for many French people to feel as if they live on an island isolated from global realities, because we chose to build a real bubble to shield ourselves from world developments and preserve present comfort. But this bubble is costly, and it is increasingly financed by our creditors.
There is a sacrifice we make collectively, with method and consistency, that of our children.
Stéphane Boujnah
Borrowing and debt are not, in themselves, toxic, first if their proceeds are used to prepare the future, second if society generates enough resources to ensure repayment without transferring disproportionate burdens to future generations. Thus, a family rightly borrows to undertake insulation work on its dwelling, or to finance the rental or purchase of a room for a child who will prepare their future in a university town. But we collectively do exactly the opposite: we borrow, mostly from the rest of the world, to perpetuate a level of social protection that we can no longer afford.
This situation is the result of an accumulation of small compromises that have become habits, with everyone sharing some responsibility. Political leaders, who have often preferred looking at the polls rather than at the cradles, and talking to voters rather than to citizens. But also each one of us, who observes, without acting on it, that this social protection system, invented in 1945, more than three generations ago, relied on economic and demographic conditions that no longer exist. In nineteen years, Social Security will be a century old, and in nearly a century France and the world have changed. Most French people remember their childhood as a time when, on Christmas day, the number of children opening gifts under the tree was greater than the number of adults and elderly people around the table; now, under the same tree, a few children—now rare—open gifts while many adults and increasingly more elderly people watch.
Why cannot our collective sleepwalking continue, and why is this time different? Because some problems, if they evolve for too long without treatment, eventually change not in degree but in nature. Treating a cancer that has progressed significantly is heavier and less certain than early treatment of the initial tumor. We are there. It is late, but it is not too late.
The Suffocation Leading to Imposed Austerity
We have entered together into a process of suffocation that is accelerating and that can lead to imposed austerity.
Some think that one can procrastinate, that old solutions remain possible, since there will always be buyers for French debt and there is therefore no problem in taking on more debt. It is a mistake when those who believe this ignore the facts; it is a lie when those who say so know the facts. For while we may be sheltered from a sudden oxygen cut, we have undeniably entered a process of gradual suffocation. And the lie, in this matter, is a betrayal. A betrayal of our children, upon whom we will lay tomorrow the weight of our renunciations and today’s conveniences. A betrayal of workers, who are asked to finance today a higher standard of living for retirees, while they themselves will not have access to the same pensions. A betrayal of retirees, who do not understand why the rules of the game are changing, when we can no longer distribute more than we produce, and we do not produce enough anymore.
The facts are cruel. Two years ago, France borrowed for ten years at a rate that was certainly higher than Germany’s but lower than the rates paid by Portugal, Spain, Italy, and Greece for the same duration. Today, France—whose debt is largely held abroad—pays more than all of these countries. Why?
First, because the stock of our debt grows faster than elsewhere. France is the third most indebted country in the eurozone, with more than 120% of GDP expected in 2027, behind Greece (130%) and Italy (137%). But France is the only eurozone country not to have reduced its debt since the end of the health crisis. On the contrary, we increase our debt stock by about 3 percentage points of GDP each year, while countries more indebted than us, especially Greece, reduce theirs. Thus Greece cut its debt-to-GDP ratio from 146% in 2025 to 130% expected in 2027. In France, public debt will have risen in 2026 by more than €160 billion, and we will owe our creditors, at year’s end, €3,620 billion. In these conditions, several public reports anticipate a debt stock reaching 130% of GDP in the middle of the next five-year term. It is thus almost certain that France will have a debt-to-GDP ratio higher than Greece before 2029.
If we are probably safe from a sudden cut of oxygen, we have undeniably entered a process of progressive suffocation.
Stéphane Boujnah
Second, because our creditors demand higher interest rates to keep lending to us. The average rate at the time of French debt issuance rose to 3.35% in 2025, compared with 1.70% in 2022 and an average zero rate in 2021. With an average debt maturity of 8.5 years, we must now refinance, at rates above 4.7%, amounts subscribed at 0% to 2% that mature. Those rates have little reason to fall, firstly because the 2026 budget debate in Parliament could be as confused and indecisive as 2025’s, secondly because the prospect of a deficit above 5% in 2027 is now confirmed for the fifth consecutive year, and finally because the likelihood grows of seeing two frontrunner candidates from the “anger” parties reaching the second round of the 2027 presidential election. Moreover, beyond the worsening perception of French risk by our creditors, interest rates are rising everywhere in the world, due to the return of inflation and the rapid deterioration of the public debt rate of the United States, which was long considered the “risk-free global benchmark.”
The combination of the continuing increase in our debt stock and the rapid rise in interest rates demanded by our lenders leads to a situation where the debt burden will have doubled between 2020 and 2026. This year we will pay at least €78 billion to our creditors, about €12 billion more than last year. This single incremental cost is larger than the entire Justice budget. In theory, therefore, with the same level of public spending, we could have doubled the number of judges, prosecutors, and penitentiary officers if we had kept the debt service at last year’s level. In 2027, the first year of the next five-year term, we will have to pay our creditors more than €91 billion, i.e., more than all the amounts we allocate to the education of our children and youths—from kindergarten to end-of-high-school. The real cost of our unbridled indebtedness thus lies first in the fact that our creditors, paid before we decide what to do with the taxes we collect, pre-empt an increasing share. To grasp the scale of our difficulties, it is useful to recall that a debt service of €91 billion represents almost the entire income tax paid in 2026 by all individuals in France. In answer to the common question from citizens, “What is my taxes for?”, we will be able to say in 2027, without dispute: “First, to pay interest to the creditors who lend us the money we redistribute.”
Our country is discovering the trap of over-indebtedness, that is, a situation where the budget deficit grows even without new spending decisions, because the debt service consumes an ever-increasing share of mandatory levies: it is now the interest charges that drive growth in public spending. Businesses experience this when operational efforts to improve performance are swallowed by financial charges that end up choking them. Over-indebted households experience it when creditors capture almost all of their income to pay debts, interest, and principal. Admittedly, the State mostly pays only interest and refinances nearly all of the principal. But we are discovering, as over-indebted businesses and households do, that the more we borrow, the poorer we become.
But while the interest rates demanded by creditors do not depend solely on us, the magnitude of our deficits does depend on us alone. Why, then, do we resign ourselves to piling up year after year rivers of public expenditures that feed a river-like flood of deficits, which ultimately ends in a muddy, sediment-filled estuary of indebtedness?
In recent years, state spending has progressed the least and in some sectors it has even fallen considerably. Local government spending has been better controlled than in the past, even though the extreme complexity of our territorial administration generates costs that are also potential sources of optimization. By contrast, social spending—primarily pensions and health—has risen far faster than GDP growth. Because we collectively decided to borrow to maintain, and even increase, first the level of pensions, then health benefits, because we do not want to give up a social model we can no longer afford. From now on, social protection represents not only the overwhelming majority of public expenditure but also the fastest-growing portion. Yet the persistent large deficits of Social Security are hard to justify when our economy is not at the bottom of the cycle: social spending is benefits paid to households that, when not covered by taxes or social contributions, weigh on the next generations who will have to repay this social debt.
Finally, the international context deteriorated since the start of the year suggests an aggravation of public deficits, which in 2027 will exceed 5% of GDP for the fifth consecutive year, whereas the level needed to stabilize the debt stock is below 3%.
A Way Forward
We can pull ourselves out of this impasse together, because we have done so in the past, and because other European countries have done so more recently.
We have done it in the past. In 1958, with General de Gaulle and the Pinay-Rueff plan. In 1983, with the tightening turn led by Pierre Mauroy and Jacques Delors. During the 1997-1999 period, to qualify France for the euro, when the government of Lionel Jospin’s broad majority pursued the Maastricht 60% debt and 3% deficit targets. Most often, we thought it was impossible, and yet we did it. Faced with the scale of the task, De Gaulle brought together, from June 1958 to January 1959, most of the political forces of the time to support the reform effort. In 1997, the dissolution of the National Assembly was widely decided to seek a strong political mandate to drive the necessary reform to qualify France for the euro. The French, with very different political majorities, have shown in the past that they could marshal the energy needed to restore our public accounts, even when many believed it impossible.
Other European countries have done so more recently.
Denmark and Sweden conducted spectacular budget adjustments in the 1990s to reinvent their highly developed social models in response to external constraints that had become unsustainable. Today, Denmark borrows for ten years at 3.42%, i.e., at a level lower than Germany’s 3.62%.
Germany, throughout the 2010s, ran primary surpluses—surpluses before debt-related financing—that enabled it to reduce its public debt ratio by 22.3 percentage points from 2010 to 2019 and to enter the 2020s with comfortable fiscal space. Today, Germany’s debt-to-GDP stands at about 64%, while France’s will reach 120% next year. The main reforms that allowed this improvement in public accounts were a reduction in unemployment insurance access in 2003, the extension in 2007 of the retirement age to 67 by 2031, and a three-point increase in the standard VAT rate, one-third of the revenue of which went to tax relief and two-thirds to debt reduction.
Italy, despite weak growth linked to unfavorable demographics, has carried out ambitious reforms since the 2010s that have helped stabilize its high debt level (137% of GDP). In two years, Italy reduced its deficit from 7.2% to 3.4%, then to 3.1% in 2025, with persistent primary surpluses, enabling a rating upgrade from BBB to BBB+. Large public investment support programs were halted, the labor market was loosened, and the gradual raising of the retirement age to 67 continues.
Greece celebrates in 2026 its third consecutive year of budget surpluses. The country records growth above the European average and a steep decline in unemployment. This is the fruit of enormous efforts to recover from the liquidity and solvency crisis of the early 2010s. The retirement age was raised to 67 and non-health social spending was capped. The public payroll was massively reduced. An ambitious territorial reform, notably the merging of municipalities, generated scale economies, now with 332 municipalities in a country of 130,000 square kilometers and 10.4 million inhabitants. But above all, the political discourse of the responsible teams rests on the slogan repeatedly voiced by Finance Minister Kyriakos Pierrakakis: “We will not pass the bill to the next generation.”
Portugal has moved in ten years from chronic deficit to a budget surplus (0.7% of GDP in 2025, for the third consecutive year). Two-thirds of the adjustment program since 2012 focused on reducing public spending and one-third on increased revenues. Public spending was trimmed through cuts in comfort health services, pension freezes, and raising the retirement age to 66. To stimulate activity, the labor market was liberalized by longer working hours, eliminating four public holidays, and reintegration programs for long-term unemployed. A political consensus between right and left, who alternated in power, around the slogan “Never again,” established the balance of public accounts, enabling the continuity of reform programs.
A New Perspective
We can get out of this impasse together, precisely if we do it together.
We must, and we can, explain that we must relinquish certain aspects of the world of yesterday that neither our demographics, nor our productivity, nor our growth can sustain, in order to reinvent our social model and preserve its essentials. How?
First, there are methods that no longer work, because they are no longer suited to the scale of the reform we must undertake. This is notably the case for winner-takes-all choices imposed on the losers in the summer following the presidential election, without any effort to include those who do not share the winners’ views.
We must therefore invent a collective deliberation, respectful of everyone’s beliefs but demanding and lucid in the face of reality. It is a deliberation that allows making choices without feeling like sacrifices. It is possible, because across all political forces in the country there are men and women ready to act responsibly. This may seem naïve to some, but no reform effort, on the scale of what we must accomplish, will be possible without building a project coalition that must bring together “the one who believed in heaven and the one who did not.”
This inclusion, if not of everyone, at least of many, is necessary, because the reform will require a constant effort for more than five years. No reform is possible without a multi-year trajectory, credible, realistic, and voluntary. It is therefore essential to build over time a form, if not of consensus, at least of agreement on a reform project that transcends traditional partisan boundaries. For the effort to be durable, its premises must be broadly shared.
How to build this gathering around a collective ambition for reform?
To achieve a chosen reform, there are three solutions: raise taxes, cut public spending, and increase growth by boosting productivity and the amount of work. The Pavlovian ease has been for each political force to want to concentrate the effort on only one of the three levers. The brutal reality is that we must act on all three levers, for two reasons. First, because the scale of the reform required cannot be achieved with a single lever. Second, and above all, because collective buy-in to a shared effort requires precisely that the efforts be shared.
First lever: increasing tax revenues, which is the default French solution in such circumstances. Thus, in 2025, the reduction of the deficit was exclusively due to tax increases, mainly on large corporations and the wealthiest households. It is still the case in 2026. But we will have to begin the reform with the highest mandatory levy rate in the euro area, and even among the 38 OECD countries. We will therefore need to deliberate together on additional taxes that would have the least impact on our productivity and growth. Inheritance taxes are probably among the least harmful in this regard. We will also likely need to raise VAT by 2 or 3 points, as all European countries that undertook ambitious reform programs did, but mainly because, in a country with worsening trade deficits, VAT is effectively the only way to make imported consumer goods bear a fair share of common costs. Many will object that VAT disproportionately hits the poorest households, who spend nearly all their income on consumption, while the wealthier households save a lot and consume a smaller share of their income. Therefore, as the Germans did, we will probably need to designate part of this VAT increase to reducing the cost of labor, by narrowing the gap between gross and net wages through a reduction in payroll taxes that mostly weigh on labor. Choosing work and production over consumption will require raising VAT to enable those who work to earn more before spending less. Similarly, lightening the tax and social burden mainly on work will probably require tapping savers by increasing the CSG.
Second lever: reducing expenditure will become the new priority. For there too, we will begin the exercise with 57% of GDP devoted to public spending. We will need to deliberate together on how best to restructure the stack of our local authorities, a legacy of a two-century-old administrative structure that has been heavily burdened for fifty years and that we can no longer afford. We must deliberate together on which public interventions we cannot afford and must be abandoned either permanently or until our public accounts are balanced again. We must also deliberate on distinguishing what is necessary in health and must be strengthened from what must now fall to personal discretionary spending, because the current system is not sustainable. We must also deliberate on the period during which most retirement pensions will stop rising, since INSEE recently showed that almost all pension growth went into saving rather than consumption.
Third lever: increasing growth potential, i.e., boosting the competitiveness of our economy and the amount of work. Any increase in taxes and any significant reduction in spending carry short-term recession risks. That is why any reform program must deploy measures to increase business competitiveness and investments in human capital, as well as in ongoing technological transformations. We must also deliberate on the conditions under which we all must work more hours, more days, and more years. For in the long run, only the restoration of strong growth grounded in increased productivity and regained competitiveness will make our social system sustainable.
Agree to a bit of hard work now to avoid a lot of blood and tears later.
Stéphane Boujnah
The only way to make the effort of collective reform acceptable to all, and bearable by each, is to act on all three levers simultaneously. We must articulate the meaning of these collective efforts, whose first beneficiaries will be our children. We must also say that these efforts are not aimed at ending a system of solidarity and public interventions to change civilization, but rather at suspending, for the number of years necessary, the less-prioritized public expenditures and interventions until we have regained control of our debt. Companies, with their “return to better fortune” clauses, know these situations. Households do as well when they forego certain comforts for a few difficult years. This chosen reform must be viewed as a positive collective project to take back control of our future, not as a punitive moment of expiation for past sins.
The construction of a fairly broad agreement, based on mobilizing these three levers, is necessary to restore the credibility of our European commitments. For many years now, France has not met the commitments to restore its public accounts pledged to our European partners who have pooled their currency with us. No one can reasonably expect European countries that work more hours per year than we do, that retire at 67, and whose pensions are not indexed, to contribute to our living costs without making the efforts they have made and which we do not want to undertake. We will not persuade anyone to help us without changing our habits.
The vast majority of French people are certainly willing to avoid imposed austerity, and ready to accept a bit of hard work now to avoid a lot of blood and tears later. For the majority of French people prefer to remain in control of their destiny within a democratic framework rather than resign to decisions deemed necessary by creditors. The savings rate in our country, high and rising, is proof of this: by saving for dark days, the French show that they consider the current system unsustainable, and that they are far more prepared to hear the truth and to enter a reform where efforts are truly shared.
We can do it, not only because we must, but especially because we have done it before, and because others have done it. It must be done together and in trust.
Since we can do it, let us do it.