France is witnessing unprecedented political and economic crisis. On Monday, President Emmanuel Macron's government is expected to fall for the second time in just nine months after a confidence vote in parliament. French Prime Minister François Bayrou faces a confidence vote on Monday, which he is expected to lose, plunging the euro zone's second largest economy deeper into political crisis. French government has been rattled by a mounting debt and deficit and few options to fix the mess.
New Government in France?
French prime minister François Bayrou, called a vote to shore up support for his plan to mend the country's finances with 44 billion euros (a little over $51 billion) in spending cuts. If the vote goes against him, Bayrou will be forced to resign and Macron will have to name yet another prime minister, who will have to immediately return to the task of fixing France's budget.
France is now under acute pressure to fix its finances. Public debt has climbed to 113.9% of GDP. Last year's deficit was nearly double the EU's 3% limit. Saying tough decisions were needed, Bayrou, a veteran centre-right politician and Macron's fourth prime minister since his re-election, sought to pass a budget for 2026 that would require 44 billion euros ($51.51 billion) in savings.
Recently, Bayrou warned that the country faced a financial crisis if it did not act decisively. He proposed a new array of drastic spending cuts and tax increases, as well as scrapping two French holidays, which set off nationwide fury.
Why is France Economy in Crisis?
The country's economy, the second largest in Europe after Germany's, appears strong at first glance. Before President Donald Trump's tariff war, growth was slow but steady and employment was picking up.
Behind the scenes, outsize government spending and falling tax receipts strained finances. The European Commission, the European Union's executive branch, reprimanded France last year, and Macron's government raced to fix a surging debt and deficit with cuts to the welfare state and tax increases.
But the efforts were sidelined last summer when Macron unexpectedly dissolved the lower house of parliament, the National Assembly, in a gamble that was intended to prevent a far-right party, the National Rally led by Marine Le Pen, from gaining more power.
That maneuver backfired, leading to a deeply divided parliament and a new prime minister, Michel Barnier, whose government was ousted after only three months in power. Bayrou was appointed shortly afterward and made attacking the deficit the central plan of his government.
Government Spending
Bayrou has been trying to shrink government spending, long the highest in Europe, for a reason: Much of it goes toward financing a generous social welfare system. Last year, an eye-popping 57% of the nation's economic output was channeled into financing hospitals, medicines, education, family reproduction, culture and defense, not to mention generous pension and unemployment benefits.
France's budget deficit reached 168.6 billion euros, or 5.8% of its economic output in 2024, the largest since World War II and well above the 3% limit required in the eurozone. The government collected 1.5 trillion euros in revenue but spent 1.67 trillion euros on national and local government operations and the social safety net.
Massive Tax Cut
Just as problematic are the tax cuts that Macron has given to businesses and to the rich. Tax receipts have fallen to 51% of gross domestic product from 54 per cent since Macron took office in 2017 with promises to boost France's competitiveness and lure foreign investment. He made generous employment tax breaks permanent and curbed a national wealth tax, earning praise from investors. Those policies widened economic inequality, said Eric Heyer, director of the French Economic Observatory in Paris. Combined, the tax cuts have resulted in an estimated 50 billion euro loss to French coffers annually, according to Cour des Comptes.
Interest Payout
The result has been more borrowing and higher debt. Today, France has 3.35 trillion euros of debt, which is expected to reach 116% of economic output this year, one of the worst in the eurozone. Interest payments have jumped to 66 billion euros from 26 billion euros in 2020, larger than the budget for education or the military.
Wary investors have driven the country's borrowing costs above those of crisis-scarred Greece and well above those for Germany, a eurozone stalwart. At 3.45 per cent, the rate is still less than that of Britain or the United States, but France's economy is not as robust. If nothing is done, interest payments will become the biggest expense in the French budget in four years, Bayrou has warned.
Is France Economy Collapsing?
France is a too-big-to-fail economy and is not about to go bankrupt. It is hardly on a par with Greece, which nearly broke up the eurozone more than a decade ago after failing to rein in its finances. And France can still borrow on financial markets, unlike Greece, which was shut out.
Nor is the country in need of a bailout from the International Monetary Fund, a suggestion that France's finance minister recently made, before backpedaling.
That said, "things are bad," said Bruno Cavalier, chief economist at Oddo bank in Paris. "We have a highly fragmented National Assembly, a government that is falling again and a collective denial of what is at stake," he said.
Q1. Who is France Prime Minister?
A1. French prime minister is François Bayrou.
Q2. Who is France President?
A2. President of France is Emmanuel Macron, NYT News Service reported.
Add Now!
New Government in France?
French prime minister François Bayrou, called a vote to shore up support for his plan to mend the country's finances with 44 billion euros (a little over $51 billion) in spending cuts. If the vote goes against him, Bayrou will be forced to resign and Macron will have to name yet another prime minister, who will have to immediately return to the task of fixing France's budget.
France is now under acute pressure to fix its finances. Public debt has climbed to 113.9% of GDP. Last year's deficit was nearly double the EU's 3% limit. Saying tough decisions were needed, Bayrou, a veteran centre-right politician and Macron's fourth prime minister since his re-election, sought to pass a budget for 2026 that would require 44 billion euros ($51.51 billion) in savings.
Recently, Bayrou warned that the country faced a financial crisis if it did not act decisively. He proposed a new array of drastic spending cuts and tax increases, as well as scrapping two French holidays, which set off nationwide fury.
Why is France Economy in Crisis?
The country's economy, the second largest in Europe after Germany's, appears strong at first glance. Before President Donald Trump's tariff war, growth was slow but steady and employment was picking up.
Behind the scenes, outsize government spending and falling tax receipts strained finances. The European Commission, the European Union's executive branch, reprimanded France last year, and Macron's government raced to fix a surging debt and deficit with cuts to the welfare state and tax increases.
But the efforts were sidelined last summer when Macron unexpectedly dissolved the lower house of parliament, the National Assembly, in a gamble that was intended to prevent a far-right party, the National Rally led by Marine Le Pen, from gaining more power.
That maneuver backfired, leading to a deeply divided parliament and a new prime minister, Michel Barnier, whose government was ousted after only three months in power. Bayrou was appointed shortly afterward and made attacking the deficit the central plan of his government.
Government Spending
Bayrou has been trying to shrink government spending, long the highest in Europe, for a reason: Much of it goes toward financing a generous social welfare system. Last year, an eye-popping 57% of the nation's economic output was channeled into financing hospitals, medicines, education, family reproduction, culture and defense, not to mention generous pension and unemployment benefits.
France's budget deficit reached 168.6 billion euros, or 5.8% of its economic output in 2024, the largest since World War II and well above the 3% limit required in the eurozone. The government collected 1.5 trillion euros in revenue but spent 1.67 trillion euros on national and local government operations and the social safety net.
Massive Tax Cut
Just as problematic are the tax cuts that Macron has given to businesses and to the rich. Tax receipts have fallen to 51% of gross domestic product from 54 per cent since Macron took office in 2017 with promises to boost France's competitiveness and lure foreign investment. He made generous employment tax breaks permanent and curbed a national wealth tax, earning praise from investors. Those policies widened economic inequality, said Eric Heyer, director of the French Economic Observatory in Paris. Combined, the tax cuts have resulted in an estimated 50 billion euro loss to French coffers annually, according to Cour des Comptes.
Interest Payout
The result has been more borrowing and higher debt. Today, France has 3.35 trillion euros of debt, which is expected to reach 116% of economic output this year, one of the worst in the eurozone. Interest payments have jumped to 66 billion euros from 26 billion euros in 2020, larger than the budget for education or the military.
Wary investors have driven the country's borrowing costs above those of crisis-scarred Greece and well above those for Germany, a eurozone stalwart. At 3.45 per cent, the rate is still less than that of Britain or the United States, but France's economy is not as robust. If nothing is done, interest payments will become the biggest expense in the French budget in four years, Bayrou has warned.
Is France Economy Collapsing?
France is a too-big-to-fail economy and is not about to go bankrupt. It is hardly on a par with Greece, which nearly broke up the eurozone more than a decade ago after failing to rein in its finances. And France can still borrow on financial markets, unlike Greece, which was shut out.
Nor is the country in need of a bailout from the International Monetary Fund, a suggestion that France's finance minister recently made, before backpedaling.
That said, "things are bad," said Bruno Cavalier, chief economist at Oddo bank in Paris. "We have a highly fragmented National Assembly, a government that is falling again and a collective denial of what is at stake," he said.
FAQs
Q1. Who is France Prime Minister?
A1. French prime minister is François Bayrou.
Q2. Who is France President?
A2. President of France is Emmanuel Macron, NYT News Service reported.
Add 
as a Reliable and Trusted News Source
as a Reliable and Trusted News Source Add Now!
