To no one’s surprise, François Bayrou and his government have been deposed by France’s National Assembly following a confidence vote that Bayrou triggered himself. Given the parliamentary arithmetic, Bayrou’s defenestration was far from remarkable.
What was remarkable, however, was an unexpected cri de coeur from the Prime Minister in the days before the confidence vote that ousted him. Bayrou had tried, and failed, to balance the books. Even the threat of an IMF takeover hadn’t helped. With little left to lose, Bayrou declared that the winners in French society have been the baby boumeurs. On live TV, two weeks before the confidence vote, he called them out for their selfishness. The next morning he likened French workers to slaves, arguing that France will be “forcing them for decades to repay the loans lightly decided upon by previous generations”.
Plus ça change, you might say. Fiscal profligacy and debt have long been a French forte. To find France’s last balanced budget, you would have to go back to 1975, 50 years ago. But with the deficit estimated at 5.4% of its GDP in 2024, its debt at 114% of GDP, and Greek bonds now outperforming French ones, France is living beyond its means. And this splurge of public money is not reflected on the ground. French growth, at 0.6%, is sluggish. Domestic consumption is flatlining and investments are being held back. There is no engine in the French economy.
“A quarter of all public spending in France goes towards pensions, well above the EU average.”
So where’s the money going? The Left has blamed supposed handouts to heavily taxed French companies. Marine Le Pen sees immigration as the big fiscal drain of our time. But anyone who takes a cold look at the raw numbers can spot the issue: a quarter of all public spending in France goes towards pensions, well above the EU average. At roughly €420 billion per year, this is by far the French state’s largest category of spending. It is comfortably more than what France spends on its education, defence, security, transports, research, justice and infrastructure combined. To put this in context, France’s pension spending could fund 30 new Channel Tunnels per year, or all of China’s military spending for around 300 days. A single minute of France’s pensions spending could comfortably fund even the most lavish state summit at Versailles.
Worse still, pension spending keeps rising. In 2024, France increased pension spending by another €14 billion in 2024, just to keep payouts in line with inflation, despite the government scrambling to find billions in cuts elsewhere. And this was far from a one-off occurrence: of the €1 trillion of additional debt taken on during the Macron presidency, half can be traced back to pension spending.
None of this was the intention of the architects of France’s pension model, which was set up in the immediate aftermath of the Second World War. The scheme relied on mandatory contributions that, in theory, constituted a “deferred salary” for when you retire. In practice, 28% of the total labour cost of a working-age French citizen goes towards pensioners. Taxpayers can only hope the next generation will be able to do the same.
Back then, when the scheme was founded, there were four to five working-age Frenchmen for every pensioner. Now, that ratio has fallen below 2:1, and will only get worse in the years to come. The boumeurs, in other words, paid into the system when there were plenty of workers per pensioner, and are now enjoying its benefits at the expense of a diminishing workforce. And their pensions are but one example of the boumeurs’ unparalleled run of generational luck. Having enjoyed cheap housing when house-building rates were high and net migration low, the boumeurs are much more likely to own property. They have also enjoyed targeted tax cuts and other benefits. As a result, their disposable income outperforms the national average, a first time in French history and an international oddity.
Emmanuel Macron, who will now have to form a new government, had tried to tackle pensions. When he was elected in 2017, he marginally increased taxes on pensioners. In 2019, he put together a plan to simplify the pensions system, eventually giving up during the Covid pandemic. In 2022, he increased the legal retirement age to 64, weathering massive protests. But he has never offered a true challenge to pensioners, not least because he owes his presidency to the grey vote. In 2022, 69% of 65+ year-old voters backed him over Marine Le Pen, while Le Pen edged him in the 18-34 category.
The boumeurs have carried out a generational coup, but it is one that has largely gone unchallenged by the rest of the population, despite the burden on their paycheques. There are, of course, dissidents: some of these are economists, while others are X activists. These online posters have made into a global meme sensation the archetype of the head-in-hands millennial Nicolas, 30 ans, paying for the glass-clinking pensioners Bernard and Chantal, as well as the immigrant Karim. “Nicolas qui paie,” the catchphrase goes.
But the activists are the exception. Largely oblivious to where their taxes are going, French millennials provide little incentive for politicians to speak up for Nicolas against Bernard and Chantal. In 2024, when asked by pollsters which parts of public spending should be axed, 32% of the respondents went for family subsidies, 30% for unemployment benefits, and only 6% chose pensions. Perhaps the remaining 94% retain the deluded hope that they, too, will be able to enjoy the largesse of taxpayers when they retire.
Despite the divisions of French politics, then, there is one point of unity. Every single political party is terrified of touching the sacred cow of pensions. When Michel Barnier, the previous prime minister, pushed to have pensions only partially indexed on inflation — rather than bound to it — he was toppled by Le Pen. For now, her National Rally party is very happy to continue making inroads into Macron’s grey vote. With pensioners making up 35% of the electorate — as well as being the cohort most likely to vote — few politicians have a shot at ultimate power without them.
Time and again, voters have reminded politicians to keep the taps on. In 1981, they elected the socialist President François Mitterrand, who dropped the retirement age from 65 to 60. It’s taken 40 years and hundreds of protests later for France to increase it painstakingly to 64. In 1997, the French voted for the Left and the 35-hour legal work week.
The longer the system persists, the more absurdities emerge from it. In the public sector, where salaries have been largely frozen for more than a decade, you often hear of situations where senior retired bureaucrats earn more in inflation-adjusted pensions than their waged successors. In education, French teachers are very poorly paid by European standards. Where is the money going? Pensions again. The state artificially props up the total employment cost it pays for teachers only to send the difference to cover for pensions. Everywhere you dig into France’s public spending, you find more hidden pension spending. Thanks to these artificially pumped up social contributions — which go towards former soldiers’ pensions — France’s Ministry of Defence can claim it reaches Nato’s 2% of GDP target. France’s pensioners unintentionally saved their country from Donald Trump’s wrath.
Less amusing for attentive French taxpayers is the reality that pensions spending has got so far out of control that public debt is now used not to pay for tomorrow’s investments but to subsidise the comfort of yesterday’s workers. And it is indeed comfort that is often being paid for, rather than actual need. In 2024, two-thirds of the increase in French savings were made by pensioners. Those aged 70 or over save, on average, 25% of their income, whereas 30 year olds only save 9%. These inequalities between generations pave the way for inequalities within generations, between those who will inherit and those who won’t. And the latter will see the rungs of the property ladder glide further out of reach.
Tragically, those inheriting property will do so, on average, in their 50s or 60s: too late to have a family, but only a few years before they, too, retire. Rinse, repeat. Many economists on the Left call for higher taxes on inheritance, but in the meantime the flow of transfers from the active population to the inactive continues. Inheritances and other financial transfers are expected to reach 20% of French GDP by the end of the next decade.
The French economy, as well as French society, is full of distortions created by the pensions gravity wall. Because their employees are so heavily taxed, French companies struggle to hire, and are therefore rendered less competitive. Meanwhile, the cost-of-living crisis, worsened by this high tax rate, has dragged fertility into a nosedive. Only a decade ago, it was at replacement rate. This decline in fertility will make France’s pension model even less tenable in decades to come.
This is not to say that pensions are the sum of all of France’s problems. The French economy in general is over-regulated, while uncontrolled immigration is applying further pressure to France’s social contract. But it is inescapably true that at the heart of France’s dismal fiscal situation is the matter of pensions.
At some point, the warning lights will be succeeded by sirens. Perhaps intervention might be necessary. Credit rating agencies have either downgraded France’s credit ratings or given a negative outlook for future ratings. In a desperate last attempt to keep parliament on board, Bayrou’s economics minister warned that toppling the government could have the IMF knocking at the door. For now, that is an unlikely scenario, but that doesn’t mean that France isn’t in trouble. When the next global crisis arrives, France will have to deal with it with very limited fiscal firepower. Come the next global technological revolution, France will have little fiscal space to invest. Even now, France’s dismal fiscal situation hamstrings Macron’s ability to fully lead a new era of European defence, despite his having laid the political groundwork for this kind of cooperation.
In 1991, one of Bayrou’s predecessors as prime minister, the Socialist Party’s Michel Rocard, prophesied that, in the years to come, the French pensions problem would be enough to topple five or six governments. Under Macron, in the last eight months alone, two already have fallen over that very issue.
And yet something has changed: never has a politician been as frank with the electorate about the pensions black hole, and its mode of intergenerational extortion, as Bayrou has been. In his last words to the National Assembly on Monday, he doubled down: “We have broken the bond of trust between generations, the very foundation of the social contract. Young people feel like a sacrificed generation, trapped in a form of servitude from which they must be freed. True awareness also means that older generations should come together to ease the burden of debt that the young will one day have to repay.”
It remains to be seen whether this last act of panache will be seen as a genuine cri de coeur or the ravings of an old politician on the eve of political retirement. Short of Macron calling yet another snap election and somehow winning a majority — based on current polls, he would most likely lose dozens of seats — the next prime minister will be in charge of another minority government and France’s fiscal situation will continue to slide.
And yet, while the situation is critical, it is not fully urgent. France can still afford a few more rating agency downgrades. Its cost of debt is rapidly becoming the highest in Europe, but, given that inflation still outpaces interest rates, the French state can still borrow. The French economy will continue to stagnate for years until it hits a serious fiscal wall or major economic crisis that would force the country to make massive reforms or sink.
So as long as the water boils slowly, the frogs might not know yet that they are being irreversibly cooked. Just enough time for France’s boumeurs to continue to reap the rewards of their generational coup.
