French Economy Minister Eric Lombard is eager to lower the public deficit with an aim of 5.4% of GDP in 2025 followed by 3% into 2029. The European Union requires member states to maintain a budget deficit below 3% but only 17 of the 27 members have met that target. France is the largest European economy failing to maintain this goal as they grapple with ever-rising government debt.
“We are going to work with all the political parties … to discuss, to talk with us. We are going, also, to work with the unions, with the employers, in order to reach a consensus on the main policies that are key for the country, and policies on which we can make adjustments that will allow us to spend less in 2026,” Lombard said, later admitting that politics have had a “negative impact on growth.”
The economy experienced a 0.1% contraction during Q4. The Bank of France expects the economy to grow by 0.1% to 0.2% in Q1 of this year, while the IMF predicts the economy will rise by 0.8% for the year.
France is facing a fiscal crisis of its own making. The government has consistently failed to address the core structural issues, instead relying on higher taxes and superficial spending cuts, which only serve to undermine economic growth. The public deficit, now surpassing 5.6% of GDP, is spiraling out of control, and the government’s projections to bring it under the EU’s arbitrary 3% threshold by 2029 are nothing more than wishful thinking. History has shown that governments never truly cut spending—they merely shift the burden through taxation, stifling private sector expansion.
The reality is that France, like much of Europe, is caught in a vicious cycle of excessive government intervention, anti-business policies, and high taxation, all of which discourage capital formation. Pension funds are vanishing. Political instability and declining tax revenues have exacerbated the deficit, yet the solution proposed is always the same—more taxes, more regulations, and empty promises of austerity.
Nothing is more inflationary than war, and Macron is eager to send off French troops to Ukraine as he closely aligns with Brussels to spur on the next major war. Confidence will decline, capital will flee, and interest expenditures will continue to rise. France risks a debt crisis that will only accelerate the collapse of the EU’s financial system. As I’ve warned before, the trend is clear: governments refuse to reform until they are left with no choice. The question is not if, but when, France will face the reckoning of its fiscal mismanagement.
