On Wednesday, Michel Barnier lost a vote of confidence in the French parliament bringing his time as prime minister to an end after just 90 days, the shortest tenure of any prime minister since the foundation of the Fifth Republic in 1958. The proximate cause was Barnier’s proposed budget, but this only highlights problems that have been building for decades.

The French government spends a larger share of national income than most comparable countries. Data from the Organisation for Economic Cooperation and Development (OECD) show that, in 2019 – before COVID-19 struck – general government spending accounted for 55 percent of Gross Domestic Product (GDP), higher than in any of the other G7 countries for which it reports the figure. This is driven by high levels of social spending, on things like welfare, healthcare, and education. Again, data from the OECD show that social spending in France accounted for 31 percent of GDP in 2019, higher than in any other G7 country. The French government imposes a heavy tax burden to fund this. In 2019, OECD data show that tax revenue came to 45 percent of GDP which, once again, was higher than in any other G7 country. But these revenues are not enough to fully fund the government’s spending and this year’s deficit is expected to reach 6.1 percent of GDP.

Barnier, appointed in September at the head of a minority government following an inconclusive general election, aimed to cut the deficit to 5 percent of GDP next year, still above the 3 percent required as a member of the euro. His budget imposed 60 billion euro ($65 billion) of tax hikes and spending cuts. On the revenue side, it included new taxes on about 24,000 of the wealthiest households, the profits of large companies, electricity, air travel, and cars. On the spending side, Barnier sought to freeze state pensions for six months next year, reduce support for apprenticeships and subsidized contracts, and reduce reimbursements for medical costs and sick pay. And all of this is to be done while ramping up defense spending in response to Russia’s invasion of Ukraine.

There was something here to upset everyone. 

“The cuts in public spending and the social safety net have a greater impact on the lives of the working and middle classes,” said left wing legislator Eric Coquerel, head of the Finance committee in the National Assembly. Opposition to such measures from the likes of Monsieur Coquerel might be expected, but Marine Le Pen’s “far right” National Rally (NR) also opposes them. In November, Le Pen set out “red lines,” including a refusal to raise electricity taxes and a commitment to increase state pensions from January. “We said what were the nonnegotiable elements for us,” Le Pen said. “We are straight in our political approach. We defend the French people.” 

NR are often lumped in with other supposedly “far right” parties like Reform in Britain. In fact, while Reform’s Nigel Farage might share Le Pen’s dislike for mass immigration, he is, in economic terms, an unreconstructed Thatcherite, offering, as John Burn-Murdoch describes it in the Financial Times, “sweeping tax cuts, and tax relief for private healthcare and health insurance.” NR, by contrast, supports high taxes, government spending, more regulation, and trade protectionism. Indeed, they are “left wing” in most things besides their attitude to immigration. This echoes debates in the United States between “Freedom” and “National” Conservatives. Le Pen described Barnier’s modest fiscal consolidation as “dangerous and unfair” and auguring “chaos” for France. 

That chaos is here, along with a fiscal crisis. 

“French borrowing costs rose above those of Greece on Monday for the first time,” Reuters reported, “as Michel Barnier’s government teetered on the brink of collapse, underlining a dramatic shift in how lenders view the creditworthiness of euro zone members.”

In November, Barnier’s government survived a no-confidence vote brought by the left-wing coalition when NR and its allies in the National Assembly abstained. When Barnier forced the budget through using a constitutional loophole on Monday, that was too much for NR which, alongside the “far left” New Popular Front, filed motions of no confidence against his government. Barnier’s became the first government to lose a motion of no-confidence since 1962.

The consequences of this instability will be felt beyond France’s borders. The country has long been a key if somewhat equivocal member of the eurozone’s “core” but could be on its way to becoming a member of its “periphery.” The consequences for the single currency and eurozone economy will be significant. The core has traditionally been a vehicle for monetary and fiscal discipline and the membership of both of the European Union’s powerhouses — Germany and France — has seen such views prevail. If France exits the core and joins the periphery, the balance of power in the eurozone will shift towards monetary and fiscal looseness. At the very least, Germany will have a harder time calling the shots and the likes of Italy will have a powerful new ally. 

The European Union has long been used to political instability among its peripheral members, but France, its second biggest economy, now has no government, no immediate prospect of getting on, and may soon have no president, either. How will it cope when a core member is one of the unstable ones?

Americans inclined to think that their politics offer a display of dysfunction unique among the nations of the earth might console themselves with a look at France. But they should avoid too much schadenfreude. 

In June, the Congressional Budget Office (CBO) forecast a federal budget deficit of $2.0 trillion in 2024 which “grows to $2.8 trillion by 2034.” The CBO drily notes that these “deficits equal 7.0 percent of gross domestic product (GDP) in 2024 and 6.5 percent of GDP in 2025…By 2034, the adjusted deficit equals 6.9 percent of GDP — significantly more than the 3.7 percent that deficits have averaged over the past 50 years.” 

The result: “Debt held by the public rises from 99 percent of GDP this year to 122 percent in 2034, surpassing its previous high of 106 percent of GDP.”

France’s political dysfunction stems from many sources, not least reactions to the mass immigration into the country in recent years. But it also stems from the plain fact that its governments have long made spending promises its economy cannot keep. 

This dysfunction could show up in any country where such promises have been made, and the United States is one of them.