If you wanted to create a classic recipe for political crisis, you could well choose a mixture of a stagnant economy, a huge and growing public debt, a perceived need radically to increase military spending, an immigration crisis, a deeply unpopular president, a government without a majority in parliament, and growing radical parties on the right and left.
In other words, France today. And France’s crisis is only one part of the growing crisis of Western Europe as a whole, with serious implications for the future of transatlantic relations.
The latest shock in France has come with the announcement by Prime Minister Francois Bayrou that he will call a parliamentary vote of confidence on September 8 over his plan for €43.8 billion ($51.1 billion) in budget cuts to address France’s budget deficit 5.8 percent of GDP — almost double the three percent that is supposed to be the limit for members of the Eurozone, and the highest in Europe after Greece and Italy, leading to a debt to GDP ratio of 113 percent. French GDP growth last year was only 1.2 percent and the economy is projected to grow by a mere 0.6 percent this year.
Bayrou’s plan includes the freezing of welfare payments, reductions in pensioners’ benefits, the abolition of two national holidays, deep cuts to state jobs, and unspecified tax increases for the wealthy. The only area of state spending that will increase is the military — and it is President Macron’s pledge (in line with the promise of Europe’s NATO members to President Trump) radically to increase military spending that has brought France’s fiscal crisis to a head.
This would involve the French military budget rising from around two percent now to 3.5 percent (plus another 1.5 percent in “defense-related” infrastructure spending). In July, Macron promised that the French military budget would reach €64 billion in 2027, three years earlier than previously planned and twice the figure in 2017. He also promised that this would not involve any increase in debt. Bayrou’s thankless task is to try to reconcile these two promises.
Bayrou is prime minister today because his predecessor, Michel Barnier, was ousted nine months ago in a vote of no confidence after he passed the 2025 budget by emergency decree having failed to gain a parliamentary majority for budget cuts. This was the first time a government had been ousted by a no confidence vote since 1962.
Bayrou stands a very good chance of being the second premier in a year to fall this way. On the face of it, his challenge looks insuperable. The loose coalition of centrist parties that supports the government was beaten in the snap elections called by Macron in the summer of 2024, and despite an election deal with the left in the second round to keep National Rally (which won a plurality of votes) down to third place in the number of seats, have only 210 seats in the National Assembly, compared to 142 for the radical rightists National Rally and its allies, and 180 for the left-wing New Popular Front.
Both of these groupings have declared that they will vote to oust the government if it persists with its budget plan. The socialists are strongly opposed to austerity measures, and are allied with trades unions that have announced a nationwide strike on September 10 to block the budget.
As for Marine le Pen, leader of the National Rally, her friendliness towards the government is hardly likely to have been increased by what many see as a politically-motivated legal case launched against her by the government, which (unless overturned on appeal) will lead to her being banned from standing in the next presidential elections.
If Bayrou’s government falls, there are likely to be fresh parliamentary elections; and the premier’s best chance may be that neither of the opposition blocs are afraid that the French public would blame them for a new political crisis, and that if the government is prepared to abandon some of its budget cuts (or covertly abandon the case against Le Pen), one or other could abstain in the no-confidence vote, leading to a government victory.
This is far from certain however. Radical socialist leader Jean-Luc Melenchon has already said that Macron himself should resign if the government loses new elections.
The implications of this crisis extend far beyond the borders of France. Bayrou has warned that if it does not reduce its debt, France will risk the fate of Greece after the 2008 financial crisis, when it suffered years of recession and very harsh and bitterly unpopular austerity measures imposed by the European Union (at the instigation of Germany) as a condition of its bailouts.
It seems inconceivable however that Brussels would be able to impose such austerity measures on France, the second largest economy in the EU. Presiding over deepening economic decline would be the politically easier choice. Moreover Germany, the largest economy, is facing severe budgetary problems of its own. Disputes over the budget brought down the last German coalition government.
The present coalition of Christian Democrats and Social Democrats have agreed (despite deep unhappiness among fiscal conservatives in the CDU) to increase borrowing from €33 billion in 2024 to €81 billion this year and €126 billion in 2029 in order to pay for a doubling of Germany’s military spending and huge (and badly needed) investment in infrastructure. Economists are warning however that this will not be sustainable without cuts in social welfare. As elsewhere in Europe, Germany’s problems in this regard are being worsened by its aging population, which both reduces the tax base and creates a huge lobby against cuts to pensions and healthcare.
The German elections in February saw a surge in support for the far-right Alternative for Germany (AfD) which opinion polls now show as close to overtaking the Christian Democrats as the most popular party. If this rise is sustained up to the next German national elections due in 2029, then one of two things will happen: either the other parties will maintain their “firewall” against allowing AfD into government, which will require a permanent, unstable and deeply divided coalition of perhaps all the other parties against them, or the firewall will collapse, leading to a German government far to the right of anything seen since 1945.
In Britain too, the Labour government of Keir Starmer is deeply unpopular. It has suffered two humiliating revolts by its own MPs against its attempts to cut social welfare so as to increase military spending and is facing the defection of many of its voters to a new left-wing party. Debt to GDP stands at 103 percent and rising.
As in France and Germany, the right-wing populist Reform Party of Nigel Farage is surging in the polls, and has a real chance of forming the next British government.
Some of these radical parties of the right and left (like AfD and the socialists in France) are openly opposed to European military support for Ukraine and increases in military spending. Others fell in line behind NATO under the shock of the Russian invasion, but are strongly opposed to a European reassurance force for Ukraine. All believe (though with very different emphases) that their countries’ problems are overwhelmingly internal ones, that will not be solved by higher military spending.
The lessons for the Trump administration are the following: first, be very skeptical of European promises to significantly increase military spending. Even if present governments are sincere, it may well be simply beyond their power.Second, however, be careful of pushing them too hard. The political and economic stability of Europe is an old and vital US interest — far more vital than the exact borders of Ukraine.
Finally, be even more careful about encouraging and guaranteeing a European “reassurance force” for Ukraine. Lacking both adequate resources and adequate political support, the European planners of this force are in no position to guarantee it themselves.
