To no one\u2019s surprise, Fran\u00e7ois Bayrou and his government have been deposed by France\u2019s National Assembly following a confidence vote that Bayrou triggered himself. Given the parliamentary arithmetic, Bayrou\u2019s defenestration was far from remarkable. Equally, his replacement by the Macron loyalist Sebastien Lecornu surprised few politicos.<\/p>\n
What was remarkable, however, was an unexpected cri de coeur from Bayrou in the days before the confidence vote that ousted him. The Prime Minister had tried, and failed, to balance the books. Even the threat of an IMF takeover hadn\u2019t 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 \u201cforcing them for decades to repay the loans lightly decided upon by previous generations\u201d.\u00a0<\/p>\n
Plus \u00e7a change, you might say. Fiscal profligacy and debt have long been a French forte. To find France\u2019s 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.<\/p>\n
\u201cA quarter of all public spending in France goes towards pensions, well above the EU average.\u201d<\/p>\n
So where\u2019s 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<\/a>. At roughly \u20ac420 billion<\/a> per year, this is by far the French state\u2019s 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\u2019s pension spending could fund 30 new Channel Tunnels per year, or all of China\u2019s military spending for around 300 days. A single minute of France\u2019s pensions spending could comfortably fund even the most lavish state summit at Versailles.\u00a0<\/p>\n Worse still, pension spending keeps rising. In 2024, France increased<\/a> pension spending by another \u20ac14 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 \u20ac1 trillion of additional debt taken on during the Macron presidency, half can be traced<\/a> back to pension spending.\u00a0<\/p>\n None of this was the intention of the architects of France\u2019s 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 \u201cdeferred salary\u201d 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.\u00a0<\/p>\n 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\u2019 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<\/a> the national average, a first time in French history and an international oddity.\u00a0<\/p>\n 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<\/a> him in the 18-34 category.\u00a0<\/p>\n 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. \u201cNicolas qui paie,\u201d the catchphrase goes.<\/p>\n 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<\/a> 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.<\/p>\n 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 \u2014 rather than bound to it \u2014 he was toppled by Le Pen. For now, her National Rally party is very happy to continue making inroads into Macron\u2019s grey vote. With pensioners making up 35% of the electorate \u2014 as well as being the cohort most likely to vote \u2014 few politicians have a shot at ultimate power without them.\u00a0<\/p>\n Time and again, voters have reminded politicians to keep the taps on. In 1981, they elected the socialist President Fran\u00e7ois Mitterrand, who dropped the retirement age from 65 to 60. It\u2019s 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.\u00a0<\/p>\n 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<\/a> 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\u2019s public spending, you find more hidden pension spending. Thanks to these artificially pumped up social contributions \u2014 which go towards former soldiers\u2019 pensions \u2014 France\u2019s Ministry of Defence can claim it reaches Nato\u2019s 2% of GDP target. France\u2019s pensioners unintentionally saved their country from Donald Trump\u2019s wrath.<\/p>\n 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\u2019s investments but to subsidise the comfort of yesterday\u2019s 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<\/a>, 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\u2019t. And the latter will see the rungs of the property ladder glide further out of reach.<\/p>\n