France's most serious economic weakness is not its tax burden or labour market rigidity, but its chronic inability to bring down public debt, according to French economist Nicolas Bouzou. In a recent interview, Bouzou argued that successive governments in Paris have failed to tackle the structural deficit, leaving the country increasingly exposed to financial market pressure and limiting its room for manoeuvre in future crises.
Bouzou, a prominent economist and author, pointed out that France's public debt has climbed steadily for decades, reaching levels that now exceed 110% of GDP. He contrasted this with Germany, where debt has been brought down more decisively, and with other eurozone members that have undertaken painful consolidation programmes. "The real problem is not spending itself," he said, "but the absence of a credible strategy to reduce it over time."
A decade of missed opportunities
The economist noted that France has benefited from low interest rates for years, but that this window is closing as the European Central Bank tightens monetary policy. He warned that if investors begin to doubt France's commitment to fiscal discipline, borrowing costs could rise sharply, squeezing public finances further. "We have wasted a decade of cheap money," Bouzou said, "and now we face the consequences."
Bouzou's comments come at a time when the French government is struggling to pass a budget that meets EU deficit rules. The European Commission has repeatedly urged Paris to bring its deficit below 3% of GDP, but successive administrations have missed those targets. The current government's attempts to reform pensions and unemployment benefits have sparked protests, but Bouzou argues that these measures, while necessary, are not enough. "Structural reforms are essential, but they must be accompanied by a serious plan to reduce debt," he said.
The economist also highlighted the political obstacles to fiscal consolidation. With a fragmented parliament and strong opposition to austerity, any government faces an uphill battle. He pointed to the recent left-wing primary as evidence of the political divide, where candidates have proposed increased spending rather than cuts. "The political class has not yet accepted the reality of our fiscal situation," Bouzou said.
European implications
France's debt problem is not just a domestic issue; it has significant implications for the eurozone and the European Union as a whole. As the second-largest economy in the bloc, France's fiscal health is crucial for the stability of the single currency. Bouzou warned that if France were to face a debt crisis, it could trigger a broader contagion, similar to the sovereign debt crisis of the early 2010s. "Europe cannot afford a French crisis," he said.
The economist also noted that France's high debt levels limit its ability to invest in the future, whether in digital infrastructure, green energy, or education. He cited the example of BYD's interest in building a plant in France, which he said would be a welcome boost, but warned that such investments require a stable and predictable fiscal environment. "Companies look at the debt trajectory when deciding where to invest," he said.
Bouzou's remarks echo concerns raised by international institutions, including the IMF and the OECD, which have repeatedly called on France to implement more ambitious fiscal consolidation. However, he acknowledged that there is no easy solution. "Reducing debt requires tough choices, and those choices are never popular," he said. "But the longer we wait, the harder it becomes."
As France prepares for the next round of budget negotiations in Brussels, Bouzou's warning is likely to resonate with EU officials who have grown frustrated with Paris's repeated delays. The European Commission has already placed France under the excessive deficit procedure, and further non-compliance could lead to sanctions. "The clock is ticking," Bouzou said. "France must act now, or face the consequences later."
