France struggles to cut debt amid political divisions and defense spending demands

In March 2025, the French government announced its commitment to reducing public debt following a maintained AA- credit rating from Fitch, though with a negative outlook. The country's public debt surged during the COVID-19 pandemic, and currently, the public deficit exceeds the eurozone limit. President Emmanuel Macron's administration faces challenges in stabilizing finances while fulfilling defense spending commitments, due to a lack of parliamentary majority. Fitch noted that despite a strong economy, fiscal consolidation would be difficult given the political landscape, which includes divisions among parties and heightened spending demands. In this context, the French public has reacted to evolving global dynamics, particularly the threats posed by geopolitical tensions such as the Russian threat, prompting a rethinking of Europe's defense strategies. France must invest significantly across sectors like defense, innovation, and green initiatives amidst high debt levels. The present situation necessitates hard choices as the government reevaluates the sustainability of its social model amidst rising public protests over economic reforms, including the contentious retirement age, set at 64. With political strife contributing to budgetary challenges, Prime Minister François Bayrou has indicated that there is no intention of reverting the retirement age to 62, while tax increases demanded by the left are also off the table. This reflects a delicate balancing act between upholding fiscal responsibility and addressing public concerns, especially as far-right sentiments rise in reaction to perceived government inefficiencies and social issues. The convergence of President Macron and Prime Minister Bayrou suggests a unified approach to managing these hurdles, yet the divided political climate poses ongoing risks to governance. The outlook for France remains complicated, as the urgency to consolidate finances clashes with the necessity to enhance defense and societal resilience. The government's determination to prioritize the reduction of the deficit underscores the ongoing fiscal challenges spurred by the pandemic, evolving global threats, and internal political divisions, which need to be addressed swiftly to avoid jeopardizing France's long-term economic stability.