For several months, France has been plunged into a new spiral of political turbulence that not only threatens the stability of its institutions, but directly affects its economic state.
Behind this crisis lies not only a decline in the credibility of the government, but also serious socio-economic risks: rising debt, tensions in the business environment and expectations that the country may turn out to be a «new periphery» of the eurozone.
Why the crisis is perceived so acutely. In September 2025, the international rating agency Fitch downgraded France’s sovereign credit rating from AA- to A+, arguing that it was due to «growing political instability» and «blurred prospects of financial consolidation».
According to Fitch, rising public debt and deficits are under threat of further deterioration. The agency predicts that debt will grow from ~113.2% of GDP in 2024 to 121% by 2027, and «there is no clear horizon for stabilization» in the coming years.
At the same time, in October 2025, the international rating agency Moody’s maintained the rating of France at Aa3, but changed the outlook to «negative», which is also a bad marker.
Such pressure from markets and rating agencies is directly related to the fact that, after the 2024 parliamentary elections, the government has been extremely unconsolidated. Former premier François Bayreuth’s attempt to impose severe budget cuts met with strong resistance from the budget-makers, and ended in a public vote of no confidence.
Markets are already reacting nervously. The yield on French 10-year bonds is close to 3.47%, which is comparable to that of Italy, one of the eurozone’s traditionally risky economies.
Investors are beginning to perceive France not as a stable «center» but rather as a «peripheral» economy.
The socio-economic situation in France today is not just another crisis, but a manifestation of deep-seated structural problems that are gradually eroding the foundations of the national economy. Political instability amplifies this vulnerability, affecting not only the country’s fiscal performance but also key macroeconomic indicators. Economic growth remains sluggish.
According to data from the French National Institute of Statistics and Economic Studies (INSEE), in 2025 France’s GDP will increase by only 0.8%, a figure that, despite a slight improvement, is noticeably slower than other EU countries. The Bank of France has also adjusted its expectations. In the forecast for 2026, growth is reduced from 1.0% to 0.9%. Economists attribute this to «renewed political uncertainty» and its negative impact on investment decisions, business sentiment and consumer confidence. In its financial stability report, the Bank of France stresses that even with moderate inflation, overall risks to the economy are shifted «downwards» due to an unstable external environment and political factors inhibiting business activity.
At the same time, despite the general anxiety, experts note some strengths of the French economy – high savings of the population, sustainable corporate balance sheets and structural diversity of industries. These factors provide a certain margin of strength. However, the business environment is increasingly reacting to political fragmentation with restraint as businesses postpone investment or revise development plans for fear of new rounds of political debate and changes in fiscal policy.
The Bank of France states that it is this uncertainty that is becoming one of the key factors impeding the economic «engine» and preventing the country from moving towards a sustainable growth trajectory. The consequences of France’s deepening political crisis are being felt far beyond the parliamentary walls, increasingly affecting society, increasing the risk of social division. Political fragmentation, which has become the norm in recent years, is not simply a clash of party interests or elite ambitions. It is a manifestation of deep tensions within French society, where growing mistrust, reform fatigue, and economic vulnerability are intertwined into a single worrying picture.
Citizens’ confidence in public institutions is rapidly declining.
The constant debate over the budget, the contradictory promises of austerity, and the apparent inability of political forces to find common ground have created a sense that power has been taken away from the population and stopped working for its benefit. In public perception, the government is increasingly seen not as a defender of stability, but as a source of uncertainty, which only adds to frustration and political skepticism.
Against this background, social discontent is likely to intensify.
Any attempt by the authorities to cut spending, raise taxes, or implement unpopular reforms, especially pension reform, will inevitably provoke a wave of protest. The French tradition of mass demonstrations and union activity, combined with a split parliament, makes such moves extremely risky.
A decision on reform may not be possible, and the debate itself could plunge the country back into a political storm. Thus, the government is trapped. Without reforms, finances cannot be stabilized, but attempting to do so risks a new outbreak of instability. The long-term economic outlook is no less worrisome. If fiscal consolidation is delayed again, and public spending continues to rise, France risks falling into a debt trap. Similar situations have already occurred in other eurozone countries, where chronic deficits and rising debt have led to protracted economic and social crises.
So, in the early 2010’s, Greece was actually on the verge of default. The surge in debt has required massive austerity programs, sparked a wave of protests, and led to a sharp drop in living standards. Portugal has had to seek financial assistance and implement painful reforms accompanied by high unemployment and social tensions. Italy, for decades, has faced a combination of high public debt, low growth, and political instability, factors that have consistently kept its economy chronically vulnerable.
France has managed to avoid radical consequences so far, but the combination of political fragmentation and economic inertia creates conditions in which a threat can become a reality.
Based on the current dynamics, several paths of development can be identified, from more optimistic to worrying.
The «compromise» scenario is that the new prime minister (or government) will form a coalition, deputies will agree on a more realistic budget, markets will be given a soft signal of consolidation. This could stabilize ratings, reduce pressure on debt markets, and restore confidence to entrepreneurs and consumers. The «stagnation» scenario assumes that parliament remains split, compromises are impossible, deficits persist and debt continues to grow.
The ratings may deteriorate further, and France will be in a state of long-term «fiscal sickness» in which it lives from crisis to crisis. And the worst-case «escalation» scenario suggests that the crisis could escalate into early elections or a series of changes of government. Markets will avoid new risks, the fear of debt default will increase, and France may experience capital outflows that worsen its economic and social situation.
In France, the crisis is not just a government crisis; it is a crisis of economic governance and public confidence.
A fragmented parliament, budget deficits, mounting debt, and excessive political uncertainty all combine to create an economic shock whose consequences can be long-term. If there is no way to overcome this political dichotomous state and ensure a real budgetary dialogue, it risks not only remaining in the shadow of European stability, but also becoming a new «risk zone» for the eurozone.
The moment has come when political games must give way to a serious and constructive economic agenda, or else the price of this crisis will be paid by the whole country.