PARIS, Oct. 22 (Xinhua) -- France has been shaken by a wave of protests that began in classrooms and spilled onto the streets. What started as student anger over crumbling schools, overcrowded classes and chronic staff shortages has escalated into violent unrest in several regions.
Soon other groups, angered by soaring energy bills, a cost-of-living squeeze and deteriorating public services, joined the protests. Beneath the disorder lie deeper, intertwined pressures: feeble growth, shrinking fiscal room for manoeuvre and a welfare model under strain, all of which highlight the acute economic and fiscal challenges confronting France.
COST-OF-LIVING SQUEEZE
Soaring fuel prices are one of the drivers behind this concentrated outburst of public anger.
Buffeted by turbulence in global energy markets, French energy prices have kept climbing. The rise has not merely lifted household bills for transport and everyday living; it has also rippled through supply chains and production costs, pushing up prices across the wider economy and further tightening family budgets.
Data released by the French National Institute of Statistics and Economic Studies (INSEE) on Oct. 15 showed that France's consumer prices rose by 3.1 percent year-on-year in September, up from 2.4 percent in August. The acceleration was mainly driven by faster increases in energy prices, which surged 21.3 percent year-on-year in September, up from 16.7 percent in August.
For French residents who rely on cars for daily commutes, fuel is an unavoidable routine expense. In 2018, a fuel tax hike triggered the nationwide "yellow vest" movement. Years later, fuel prices becoming the focal point of public discontent once again demonstrates that certain long-standing issues affecting people's livelihoods have not been fundamentally resolved.
Sluggish economic growth has further eroded citizens' ability to cope with the rising cost of living. According to INSEE data, the French economy contracted by 0.2 percent in the first quarter of this year, posted zero growth in the second quarter, and household purchasing power per consumption unit declined by 0.6 percent in the second quarter.
LIVELIHOODS VS FISCAL CONSOLIDATION
High public debt and rising borrowing costs leave the French government with limited fiscal leeway to address social grievances.
INSEE data indicates that by the end of the second quarter of this year, France's public debt stood at 119 percent of its Gross Domestic Product (GDP).
Meanwhile, yields on government bonds have continued to climb. French radio station Europe 1 reported that the yield on France's 10-year government bonds exceeded the symbolic 5 percent threshold on Wednesday for the first time since 2002. Rising financing costs will increase the government's debt servicing burden, squeezing space for other public expenditures.
The French government estimates that interest payments on public debt will rise from 79.2 billion euros (88.96 billion U.S. dollars) this year to 91.2 billion euros next year.
Substantial social protection spending also complicates fiscal consolidation efforts. Data show that in 2024, French social protection benefits expenditure accounted for 31.9 percent of GDP, higher than the European Union average of 27.3 percent. As population aging accelerates, spending on pensions, healthcare and related areas faces sustained pressure.
The French government finds itself in a dilemma: on the one hand, in response to rising energy prices and calls to improve public services, it needs to provide subsidies, adjust taxes, and increase public spending; on the other, heavy debt burdens, rising interest expenses, and pressures for fiscal consolidation constrain its ability to expand expenditure.
UNREST-FUELING ECONOMIC RISKS
The protests and violent riots have damaged shops, public buildings, and infrastructure across France. The government estimates that around 3,000 businesses nationwide have been directly affected, with economic losses likely to reach hundreds of millions of euros.
In the longer run, persistent social unrest could also undermine consumer and investment confidence, dragging down an already fragile French economy. The OFCE, an independent economic research institute affiliated with Sciences Po in Paris, released a report on Oct. 14 forecasting that the French economy would grow by 0.4 percent in 2026 and 0.5 percent in 2027, noticeably below the eurozone average. If social unrest intensifies further, it could place additional strain on economic performance.
At the same time, social turmoil creates greater political headwinds for fiscal consolidation. As the 2027 presidential election approaches, debates over public services, social welfare, fiscal austerity and governance are growing increasingly fierce.
Divergent views among political forces on the root causes of social conflicts and their solutions make it harder for the government to build consensus to cut spending and rein in deficits.
On Oct. 19, Gilles Moec, chief economist at French insurance group Axa, told French daily Le Monde that while France's debt problem was serious but manageable, political instability could significantly aggravate the situation.
The deep-seated economic and social contradictions behind these protests cannot be resolved solely through short-term measures. Striking a balance between easing livelihood pressures, restoring economic growth, and managing public debt remains a long-term challenge for the French government. ■
