Another “war” is being waged in Europe as riot police, barricades, fires, tear gas, and hundreds of thousands of angry students fill the streets of France in what is a major demographic clash over how to manage a runaway welfare state.
The country is a pillar of the European Union but a fiscal basket case following decades of profligacy. Recent cuts to its education budget sparked nationwide protests. Teacher shortages, inadequate facilities, and overcrowded schools have persisted for years, but on Sep. 21 at a school in suburban Paris, students protested, and a national movement exploded.
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Russian bots fanned the flames and helped spread the movement to other groups and countries.
The “cost of living” is a rallying cry, but France’s welfare state is the problem. It’s the most expensive and unaffordable in Europe, and French pensioners are the world’s most pampered retirees. Most worrisome is that protesters demand more benefits – not fiscal responsibility, which would control living costs – and as such threatens France’s future, the European Union’s, and Ukraine’s fight against Russia.
France’s retirement age is 62, and pensions cover roughly 72% of pre-retirement earnings. By comparison, Germans and Americans retire at 67, and pensions in Germany are 55% of pre-retirement earnings and 50% in the US.
France’s overall entitlement costs – from healthcare to vast public housing complexes – are higher than neighboring welfare states. Its public spending reached a staggering 57.2% of its total GDP in 2025, 7.4 percentage points above the euro-area average. All attempts to cut entitlements or raise retirement ages have failed, and even relatively small cuts in education resulted in national riots led by a disaffected younger generation.
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An Unhappy Republic: France’s Troubles Extend Beyond the Street
Masked youths clashed with police, torched vehicles and looted shops as students and demonstrators took to the streets across France over rising prices, strained household budgets and poor classroom conditions.
France’s financial predicament may not be another “Greece” crisis yet, but its internal strife, external debts, and widespread social resistance against any government discipline raise serious concerns across Europe and in financial markets. The demographic divide complicates the situation and is worrisome: “Older France” demands that entitlements are protected and it controls political outcomes. But “Younger France” wants educational benefits reinstated and higher incomes and has taken to the streets.
Unfortunately, the “revolution” France needs is economic, not a social uprising demanding more handouts.
Protests are making financial markets more nervous than they are already about the country’s deteriorating financial condition. Investors worry about the $1 trillion in debt France owes that comes due in 2030, a staggering amount racked up after years of economic mismanagement. Its government has not had a fiscal surplus since 1974.
“France has been this free rider in Europe for years, if not decades. It has gotten away with fiscal murder,” said Kevin Thozet, a portfolio adviser at the French asset manager Carmignac. “It worked as long as people were not noticing. Now people have started to notice.”
The fact is that France may become ungovernable if spending cannot be bridled and protests cannot be stopped. Last week, as crowds of young people grew, France’s lawmakers met and refused to cut tax breaks for pensioners, and more investors dumped French government bonds.
At the same time, Europe needs all of its members to spend more on defense, energy security, and Ukraine and to bolster themselves against Chinese competition. Unfortunately, Europe is also awash with other welfare states that may balk at picking up the slack left if France doesn’t sort itself out.
Fortunately, France is not poor; it is overextended. It has successful companies and considerable private wealth and savings, so it will borrow and eventually be forced to trim everyone’s benefits to survive. But its debt is currently frightening and must be refinanced at higher interest rates, which will require the government to make even deeper cuts to its welfare state and raise taxes, further upsetting its citizenry.
Worse, leaders appear to have learned no lessons yet: The proposed 2027 budget imposes only minimal pension trims but more serious cuts in educational spending. Pensioners live well, but schools suffer from teacher shortages, oversized classes of 35 or more, dilapidated buildings, and a broken university admissions system. The country spends “like a sailor,” forking out the equivalent of 14.1% of its GDP on retirement pensions alone, far higher than any other Euro nation.
Riots worsen, thousands have been arrested, and rights groups warn that police violence will lead to more protests.
Financial markets fear recent polls that show far-right, Putin-friendly Marine Le Pen may unseat President Emmanuel Macron next spring. Le Pen has received money from Putin in the past, gone to jail for financial shenanigans but has recently stated that she won’t abandon Ukraine. However, if she wins, she will reduce Macron’s political, financial, and military commitments, putting more of Ukraine’s financial burden onto Germany, the EU institutions and other European governments. Reuters reports that European officials are already discussing this possibility ahead of France’s 2027 election.
France’s fiscal crisis is an EU problem because it is the euro area’s second-largest economy.
President Donald Trump weighed in on the situation, blaming the protests on rampant immigration. “What’s happening in France is nothing less than out-of-control mass migration. This isn’t about schools; this is about Islam wanting to take over a once great Country!” he posted. There’s an element of truth about this, but France’s foreign minister dismissed the comment as an attempt by Trump to drive his global right-wing political narrative ahead of the US midterm elections.
France’s problem is not about protests but that protesters oppose fiscal discipline. Every group wants more from a diminishing pie, and if the situation becomes a full-blown crisis, then Germany and other EU governments will have to cover shortfalls. This will speed the proposed shift toward common defense financing for Europe, an architecture that would shelter the continent and Ukraine from the fiscal or political crises involving individual members.
“Europe must be ready to take responsibility for its own security,” said European Commission President Ursula Von der Leyen. She has proposed a European Security Council, involving non-EU allies Britain, Norway, and Ukraine, to face the Russian threat. “Europe must be ready to take responsibility for its own security.”
And France must get its act together.
Reprinted with permission. Read the original here.
Diane Francis is an award-winning columnist, bestselling author, investigative journalist, and television commentator. She writes twice weekly at https://dianefrancis.substack.com/ and is Editor at Large with the National Post and Postmedia newspapers writing twice weekly. She is Senior Fellow at the Atlantic Council, Eurasia section, in Washington DC. She has written pieces for the Wall Street Journal, Washington Post, Daily Beast, Politico, Miami Herald and the New York Post. In addition she is a Distinguished Professor at Ryerson University's Ted Rogers School of Management and has been a Visiting Fellow at Harvard University’s Joan Shorenstein Center on Media, Politics and Public Policy. In 1991, she became Editor of Canada's Financial Post, the first woman editor of a national daily newspaper in Canada, a position she held until the paper was sold in 1998.