The Easy Knowledge Blog

A protest that began with angry students is now colliding with a fiscal crisis and political instability, and it is reshaping the race for the presidency

🎧 Post Summary

In our earlier post of October 6, we covered where the student protests began (see the English edition of Burning Schools, 6,000 Arrests: Why French High Schoolers Took to the Streets, here). Two weeks later, the protests have grown from schools into citywide unrest, and fiscal and political problems have surfaced all at once. This follow-up explains where France stands now, how experts see the outlook and what solutions are on the table.

1. What happened: from student protests to nationwide unrest

The protests began in September at high schools in working-class neighborhoods of northern Paris. Students demanded more teachers, smaller classes and better school buildings, and the movement spread to Bordeaux, Rennes, Nantes, Lyon, Lille, Marseille and other cities. On Saturday the 17th, Yellow Vest–style citizens angry about the cost of living, university students and trade unions joined the nationwide demonstrations.

Official figures put the weekend turnout above 500,000. According to iNews24, police estimated about 550,000 and organizers about 800,000. Most marches were peaceful, but clashes broke out in Paris, Lyon, Marseille and elsewhere, followed by looting and arson.

• Arrests and injuries: Prime Minister Sébastien Lecornu’s early figures were 1,200 arrests and 150 injured officers. Later reports raised that to 2,000–2,500 or more arrests and roughly 1,000 injured police and gendarmes. The justice minister said about 150 people were detained in custody and more than 800 were referred to trial.
• Damage: Limoges city hall was badly burned, and reports say more than 3,000 shops were looted or damaged. The digital minister said looted goods were being sold online and asked platforms to remove the listings.
• Controls: Partial curfews were imposed in Paris and other places, rallies were banned on the Champs-Élysées and around train stations, and carrying fuel containers was barred in Paris. The U.S., China, Germany and others issued travel warnings for France. Police said Monday night passed without major incidents.
• Government response: Lecornu acknowledged the initial response fell short and promised a much larger police presence on Saturday the 24th. Interior Minister Laurent Nuñez offered to resign, saying police had lost control, but President Macron rejected the offer. Parliament will hold an inquiry into intelligence, policing and preparedness.

The calendar ahead is crowded. The prime minister was due to meet five union leaders on the morning of the 21st (student representatives were not invited), talks with political parties are set for the 22nd, and further protests are planned for the 24th. Unions have also called a separate action on November 5. We could not confirm the outcome of the 21st meeting at the time of writing.

2. Politics: a minority government and the presidential race

No party won a majority in the 2024 legislative elections, and the Lecornu government is a minority government. According to Newspim, two previous prime ministers also left office over budget disputes. President Macron is term-limited and cannot run in the presidential election in April–May next year.

Political camps read the protests very differently.

• Far-left France Unbowed, Jean-Luc Mélenchon: says the government cracked down on students and inflamed the clashes, and that the protests are a problem of underlying grievances rather than public order. He also criticized the Paris police command.
• Far-right National Rally, Marine Le Pen: accepts that some protester demands are legitimate social demands, but argues that violence and government incompetence are holding the country hostage, and campaigns on restoring law and order. She called the unrest a warning to the government.
• Government: Lecornu said far-left groups had planned riots, and a man reportedly linked to far-left movements was arrested on suspicion of setting fire to Limoges city hall. Student unions, by contrast, describe the protests as an outburst of anger at Macron’s policies.

In the presidential race, Le Pen leads. In a Toluna Harris Interactive poll taken October 5–8, before the unrest (2,004 respondents), she led with 35–37%. After the unrest, the U.S. prediction market Kalshi reportedly showed her odds of winning rising from 39% to 53% (Édouard Philippe 15%, David Lisnard 11%, Mélenchon 8%). Note that these are betting odds from market participants, not poll results.

Professor Emile Chabal of the University of Edinburgh diagnosed a paralyzed parliament in which no party can channel social discontent, and said fear of disorder could, as after 1968, favor conservative and centrist parties. Professor Paul Smith of the University of Nottingham said Le Pen is the biggest potential beneficiary.

3. Public finances: the crisis in numbers

• Debt: At the end of Q2, public debt was about €3.6 trillion, roughly 119% of GDP (115.6% a year earlier). BNP Paribas projects about 121% in 2027 and about 124% in 2032.
• Deficit: 5.4% of GDP this year, well above the EU limit of 3%. The government targets 5.0% next year and has warned it could reach 6.5% with no action.
• 2027 budget: About €54 billion in deficit reduction, of which roughly €43 billion are new measures and about two-thirds come from spending restraint. It cuts about €6 billion each from pensions and health insurance, freezes the civil-service pay index (unions say it is the fourth straight freeze), halts inflation indexation for pensions above €1,260 a month and removes the 10% tax deduction for retirees.
• Interest burden: Debt-service costs are projected to rise from about €62.6 billion this year to about €91.2 billion next year (Newspim citing the FT; estimates vary by outlet). Fitch notes that 2027 interest costs will exceed €90 billion, more than the defense (about €63.4 billion) and education (about €65.5 billion) budgets.
• Track record: According to Euronews, France missed its budget target in three of four years from 2023 to 2026.

4. How markets and rating agencies see it

The 10-year French bond yield touched 4.96%, the highest since July 2002, and the spread over German bunds widened to 152 basis points, the widest since 2011. Euronews reported that France is now paying more than Italy and Greece. The Italy and Greece spreads also widened by about 15bp, and the euro slipped to around $1.116. The CAC 40 is down 2.8% over the past month and about 6% over six months.

Rating agencies are watching. Fitch cut France from AA- to A+ in September 2025 and affirmed A+ on August 28 this year. It says a negative outlook could follow if the deficit is not meaningfully reduced and a downgrade could follow if debt rises further, but stresses that no outcome is automatic. Fitch estimates the deficit would need to fall to about 3% to stabilize debt under current conditions. Scope reportedly downgraded France in September.

There is pressure from the EU as well. France is already under an excessive deficit procedure, and according to iNews24, failure to follow recommendations could bring fines of up to 0.05% of GDP every six months (a separate EU sanctions procedure would be needed). The European Central Bank has a bond-buying backstop, the Transmission Protection Instrument (TPI), for severe market stress, but Euronews notes it comes with conditions such as debt sustainability and compliance with fiscal rules.

5. Expert outlook: scenarios

Growth forecasts differ widely by institution. The government assumes 1% growth in 2027, but the High Council of Public Finance (HCFP) called that scenario optimistic, assuming a strong recovery in private investment and not fully reflecting the effect of higher rates on borrowing costs.

• European Commission (May): 0.8% in 2026, 1.1% in 2027; unemployment rising from 8.3% in 2026 to 8.7% in 2027
• OECD (June): 0.7% in 2026, 0.8% in 2027
• Fitch (August): 0.8% in 2026, 1.1% each in 2027 and 2028
• ING (October 15): 0.3% in 2026, 0.6% in 2027

Based on these, experts discuss roughly three paths. These are scenarios drawn from published analyses, not forecasts that are certain.

• Base case (compromise passes): ING expects that, without a majority, the government pushes the budget through using Article 49.3 of the constitution, the adjustment is somewhat diluted by concessions, but the government survives. Even if the budget passes, the debt ratio keeps rising (121.7% in 2027 by ING’s numbers) and uncertainty does not go away.
• Delay scenario: If parliament blocks the budget, stopgap measures such as ordinances or a special law are discussed, and negotiations could drag into the summer. BNP Paribas calculates that if serious deficit cutting slips to 2028, debt could reach 126% by 2032.
• Political shock scenario: If the presidential and legislative elections again produce a fragmented parliament, fiscal reform could drift once more. ING notes that few candidates address pensions, the largest spending item, in concrete terms.

6. Solutions: what experts and politicians propose

The prescriptions fall into four broad camps. Many conflict with one another, so rather than treating any one as the answer, it helps to look at each argument’s evidence and weak points together.

1) Fiscal consolidation centered on spending and pension reform

• The OECD says stabilizing debt requires a cumulative adjustment of about 3 percentage points of GDP, over €100 billion, by 2030. Because public spending is about 57% of GDP, 7.4 percentage points above the euro-area average, it recommends that spending control be the core of the effort.
• It suggests resuming the 2023 pension reform, which was postponed until after the 2027 election, raising the retirement age from 62 to 64 and considering linking it to life expectancy. On health, it recommends wider use of generic drugs and lower administrative costs; on family and housing benefits, more precise targeting by income and need.
• A Bloomberg opinion piece carried by the Korea Times argues there is no alternative to dull and unpleasant budget discipline. It says at least €125 billion must be cut by 2032, and that raising the retirement age to 65 would yield about €18 billion. Goldman Sachs’s Sharon Bell likewise says the deficit is hard to cut without painful measures.
• Weak points: The 2023 pension reform triggered mass protests and was ultimately postponed. It is politically hard to carry out ahead of an election, and overly rapid austerity risks slowing growth.

2) Gradual adjustment that does not damage growth

• The OECD warns that sharp tightening in a weak economy can backfire and calls for a credible multi-year path. It would protect spending that matters for future growth, such as health, innovation, education and the climate transition, and use systematic spending reviews to identify high-impact programs.
• On revenue, it advises against broad tax increases on labor and investment, and instead proposes phasing out low-value tax breaks (such as reduced rates for restaurants and renovation) and re-examining social-contribution exemptions worth about €80 billion a year.
• Weak points: ING judges that this budget prevents deterioration but does not stabilize debt, so gradual adjustment alone may be insufficient to dispel market doubts.

3) Higher revenue from the wealthy and a focus on distribution

• The proposal designed by economist Gabriel Zucman would levy an annual 2% tax on the wealth of people with assets above roughly €100 million (about $115 million). Supporters say a simple rule is harder to avoid; opponents argue that start-up founders with no cash flow could not afford the tax and that investment capital could leave the country. The proposal was rejected in the National Assembly on October 31 last year.
• According to ING, the far-left France Unbowed backs writing off part of the debt held by the central bank and expansionary fiscal policy. On the streets, many call for more investment in schools and public services.
• Weak points: Centrists and the right largely oppose it, and the government rejects large spending increases because it lacks fiscal room. There are also concerns that debt write-offs or expansionary policy could further shake market confidence.

4) Political consensus and social dialogue

• A shared diagnosis is that neither the budget nor pension reform can be carried out without some degree of agreement in parliament. Le Pen has said that, given the debt crisis, passing a budget is itself necessary, but she opposes added burdens on retirees. ING judges that the National Rally’s fiscal consolidation plan relies on optimistic assumptions.
• Professor Donatella della Porta analyzes the protests as a broader mobilization that encompasses inequality, cuts to public investment and democratic rights, and says students want welfare spending rather than military spending. The government is trying dialogue through this week’s meetings with unions and parties.
• Weak points: Student representatives were not invited to the meetings, and critics say a government that must tighten security and pursue social dialogue at the same time is trusted by neither side.

📌 Good to know

• Figures are provisional. Arrests, injuries, turnout and interest costs differ by source and date and keep changing.
• Claims of far-left orchestration are politically charged. The government and the National Rally emphasize far-left involvement, while France Unbowed points to underlying grievances and police conduct. Segye Ilbo, citing the FT, reported an estimated 5,000 far-left individuals with potential for violence, a figure based on unnamed sources.
• There is controversy over harm to minors. Human Rights Watch criticized excessive use of force, citing a teenage protester seriously injured by riot-control equipment. The circumstances of individual cases are under investigation.
• Prediction-market odds are not polls. Le Pen’s 53% reflects bettors’ expectations, and the election is still more than six months away.
• Market spillover deserves separate attention. Rising French yields and a weaker euro can feed into risk premia across European financial markets, making them variables worth watching alongside global rates and currencies.

In sum, France’s crisis started with a school issue but is now a single thread linking public finances, politics and social conflict. Experts broadly agree that stabilizing debt requires adjustments measured in tens of billions of euros, but disagree sharply over who should bear the burden and how. The near-term turning points are this week’s meetings with unions and parties, the protests on the 24th, the unions’ November 5 action and parliament’s budget vote. This post is not investment advice, and political and economic outlooks are uncertain.

References

• Al Jazeera – Why have France’s school protests become a wider political crisis? (aljazeera.com)
• Al Jazeera – France to impose new curfews where required after calm night (aljazeera.com)
• Euronews – France’s sovereign debt crisis explained: How dangerous could it be? (euronews.com)
• ING Think – France’s 2027 budget is only the first fiscal test (think.ing.com)
• OECD – France’s public finances: Reducing debt without compromising growth (oecdecoscope.blog)
• Asharq Al-Awsat – French PM to Meet Unions as Government Prepares for More Protests (english.aawsat.com)
• Newspim – France’s 2027 budget contains savings of about 65 trillion won; pensions and civil-service pay restrained (newspim.com)
• Financial News – Le Pen’s chances of winning next year’s presidential election rise amid French protests (fnnews.com)
• iNews24 – [World Eye] Fiscal trouble and riots: Macron’s government in turmoil (inews24.com)