Transcription
France has seen five prime ministers in the last two years. The absence of a majority party in parliament results in all established governments being weak and fragile. However, there is a more significant reason behind the downfall of these governments than their weakness in parliament: France's deepening debt crisis.
The public debt, exceeding 3.3 trillion euros, accounts for 117% of France's gross domestic product. This year, France continued to increase its public debt with a budget deficit above 5%. This rate is far above the European Union's 3% limit. Consequently, as France's indebtedness increases, finding new debt becomes more costly. So much so that the interest France pays on its debts has now surpassed even Greece's. So, how did France reach this point? Will France be able to overcome the budget crisis and its unstable governments? Or will these crises bring about the end of the Fifth Republic, as the French have long debated? Today, in this video, we will discuss the crises France has fallen into.
Yes, behind the camera today is Reyhan. Reyhan, I will start by asking you a question. How do you know there is a crisis in France? For example, would you look at the people and say there is a crisis or not?
>> I would say by looking at the people. For instance, if there are protests, I would say there is a crisis.
>> Well, let's put it this way. I don't think you can tell if there is a crisis in France by looking at the people. Because the people are constantly protesting. The intensity of these protests can tell us something, but we don't say there is a crisis in France just because the people are protesting. Because the people in France have been protesting for centuries, and they are not entirely unjustified.
Of course, if we look briefly at the recent past, what do we remember? We remember the Yellow Vests. For example, in 2019. Then there were the pension law protests. Then, not even two years ago, there were the Nael Merzouk incidents. After an African youth was killed by the police, young people took to the streets. For the past two years, we have seen farmers constantly closing highways and protesting in France. Therefore, protests have always existed in France. So, we need to look at something else. What can we look at? We can look at the economy. For example, as I mentioned earlier, the debt has reached serious levels. France continues to run a 5% budget deficit every year. But this happens every year. That is, since 2020, France's debt-to-GDP ratio has been above 100%. Therefore, why has something that has been happening for 5 years turned into a crisis? We cannot say it is solely due to borrowing, because this borrowing issue actually became a major problem in France with the COVID-19 pandemic. The state had to spend excessively to keep the private sector afloat. At that time, when shops were closed and therefore could not sell anything, the state also could not collect taxes. We did not talk about a crisis at that time. Today, we are talking about a crisis. So, the only reason we say there is a crisis is not just debt. There must be something else. This something else is actually the government crises we have been experiencing for the last two years. Debt alone is not a crisis. If a government had fallen in France on its own, it would not have meant much to us. But the reason we say France is in crisis is that there are economic problems, but the government that could solve these problems cannot achieve stability and balance. Therefore, to understand the crisis France has fallen into today, we will first look at the government crisis. Then, we will go down one layer beneath this government crisis. We will try to understand the economic problems. Why is France constantly falling into a debt trap? What are the structural reasons for this trap? We will discuss these. Then, we will try to understand the changing social structure in France and the impact of this social structure on the political crisis. And finally, is there a way out for France? What future awaits France in the upcoming elections, meaning a presidential election where Macron is not a candidate? We will discuss these at the end.
Now, while discussing the political crisis, let me first explain this. We decided to make this video with the fall of the François Bayrou government on September 8th. But after that government fell, before we could make the video, Sébastien Lecornu was first appointed as prime minister. Then he formed the shortest-lived cabinet in French history and resigned as prime minister within 14 hours. Following this resignation, Macron reappointed Sébastien Lecornu as prime minister. So, as we are making this video, we are currently in the period of Lecornu's second cabinet. But by the time you watch this video, perhaps Lecornu will also have to resign, or the government will fall due to a vote of no confidence. In that case, we might see another government. Because France's 2026 budget has not yet passed parliament. In fact, the budget discussions were what led the previous prime minister to resign before Lecornu. So, what is the political crisis that led to Lecornu's resignation this month, François Bayrou's resignation last month, and Michel Barnier's, Gabriel Attal's, and Élisabeth Borne's resignations last year? To understand this, we need to go back in time a bit. Now, if Ömer were here, he would probably take us to 1958, but I will go to 2022. As we come from 2022, we will also take a break in 2024. What happened in 2022? France entered two important elections in 2022. The first of these was the presidential election held in April. Emmanuel Macron won the presidential election in the second round against Marine Le Pen with 58% of the vote. We made two videos about both Macron and Le Pen at that time. Those who are curious can also check those videos. Two months after the presidential election, the election that caused today's crisis was held: the legislative elections in France, meaning the parliamentary elections. In the parliamentary elections, Macron and his alliance lost their majority in parliament. The Ensemble alliance, led by Élisabeth Borne, received 25.8% of the vote. In second place, with only a thousandth of a vote difference, was the Left alliance with 25.7% of the vote. Jean-Luc Mélenchon, who finished third in the presidential election, was at the head of this Left alliance. Marine Le Pen's party, entering the election without an alliance, came in third with 18.7% of the vote. Therefore, after the 2022 elections, we have a Macron bloc that has weakened but not collapsed. Facing it are two rising blocs: one is the Left alliance led by Mélenchon, and the other is the National Rally party led by Marine Le Pen. The other actor in parliament is the Republican Party, a centrist party that, although weak, can enter into negotiations with the government. So, where exactly does Macron stand ideologically?
>> Well, we define Macron as centrist. There is even a term called radical center for Macron. Macron actually came from the Socialist Party, but looking at the policies he implemented, he is on a more neoliberal line. What keeps Macron in power today is his ability to form alliances with parties like the Socialist Party and right-wing parties like the Republicans. While doing this, he can include other centrist parties within his electoral alliance. Let me set aside what we mean by right and left here. Macron presents himself as a political figure who advocates for pro-European, neoliberal policies, while trying not to turn his back on the welfare state. But as we will examine his policies shortly, we will see that he is not at all like his former Socialist Party days. He simply has a voter base that is culturally far-right, fueled by negative identity politics. When necessary, leftists form alliances with Macron to prevent Marine Le Pen from coming to power. That's the whole story. Macron is the common, least hated man for everyone right now.
>> The lesser of two evils, you mean.
>> I ended our Macron video with "the lesser of two evils" to describe him. But he might not be the lesser of two evils anymore. On one side, there is Macron and the center that is sinking with him. On the other side, there is the rising left and the rising right. And on another side, there is the small right-wing Republican Party. This four-way divided structure eliminated the possibility of forming any coalition in parliament. The only coalition that could have been formed might have been between Macron and the Republican Party. Because then, when the Republican Party and Macron's Ensemble alliance came together, they could have surpassed 289. But Macron did not lean towards such a thing, and Élisabeth Borne continued her görev as prime minister. There is no scenario dangerous enough to bring down the government for Macron here. But passing laws is no longer as easy as before. Because to pass a law, you need a majority in parliament. But the Socialist Party on the left and the Republican Party on the right can vote against bills to pressure the government and want to make changes to those laws as they see fit. Macron, by trying to play both sides at the same time, could alienate both sides. During this period, we see that Élisabeth Borne bypassed parliament to pass some laws. How is this possible? Actually, according to Article 49, paragraph 3 of the Constitution, there is a power given to the prime minister. The prime minister can pass laws on budget-related matters, financial matters, and in certain limited areas without the approval of parliament. But there is a price for this. That is, when the prime minister passes a law without asking parliament, parliament can demand a vote of no confidence within 24 hours, and the government can fall with this vote of no confidence. Therefore, the prime minister takes a risk. They can legislate a bill without asking parliament, but there is a possibility of the government falling as a result of this risk. Élisabeth Borne is the prime minister who has used this article most frequently in French history. She is also the second most frequent user. There is someone who used it more than her, but no prime minister has used it as much as Élisabeth Borne in such a limited time. Therefore, whenever Élisabeth Borne could not convince parliament on a matter, she immediately relied on the power given to her by Article 49.3 and could make a law without asking parliament. We say she took this risk, but it was not 49.3 that brought about the end of Élisabeth Borne's premiership. The event that ended her premiership was actually the highly controversial immigration law at the time. The immigration law had been debated for about 18 months, and while it was initially a law that prioritized the integration of immigrants into France, over time, the government made tough negotiations with both Marine Le Pen and the Republican Party at the time to convince the right-wing parties to pass the law. As a result of these negotiations, this immigration law became a law that made integration more difficult for immigrants and restricted their social benefits. When the bill transformed in this way, the more left-leaning Health Minister within the cabinet, Aurélien Rousseau, resigned. Following his resignation, and as Europe entered a period approaching the European Parliament elections, Élisabeth Borne resigned as prime minister in January 2024.
>> I didn't quite understand why she resigned.
>> There was a disagreement within the cabinet. Therefore, there is a prime minister who could not convince her cabinet to pass the law she made. This does not look good, but on the other hand, we also said that Élisabeth Borne used 49.3 very frequently. This also creates discussions in parliament. 49.3 is a very undemocratic article. Because the budget, by definition, is under the purview of parliament. If parliament has one function, it is to plan the budget. Because the budget is about how the people's taxes will be spent. People elect their representatives to parliament precisely for this reason. Because we pay taxes. We expect representation in return. But when budget-related matters are passed using 49.3 without consulting parliament, it actually reduces the prime minister's popularity. Therefore, Élisabeth Borne became the prime minister who passed difficult laws that Macron had not been able to pass until then, such as the pension law and the immigration law, by using 49.3. In other words, she solved these crises in the way Macron wanted. In return, she faced significant backlash, both from the public and from opposition MPs in parliament. In such a scenario, Macron no longer needed Élisabeth Borne as much after passing those critical laws. He needed a prime minister with a cleaner record, a more sympathetic one. And this person was Gabriel Attal. Gabriel Attal became prime minister at the age of 34. He is the youngest prime minister in France's history to date. In a way, going into the European Parliament elections with him seemed more advantageous for Macron.
>> So, you mean Macron forced her to resign?
>> It was a bit like that. After Élisabeth Borne's resignation, Macron posted a message thanking her. This post was interpreted as: Macron requested it, Élisabeth Borne requested to be relieved of her duties, and Macron thanked her for not refusing his request. Because Élisabeth Borne continued to serve as a minister in cabinets even after resigning. Did the change of prime minister result as Macron wished? Of course not. The European Parliament elections were a complete fiasco for Macron. Macron's alliance received only 15% of the vote in the parliamentary elections. In contrast, the National Rally party, led by Marine Le Pen, received 32% of the vote. And the leader of the National Rally party entering the European Parliament elections was Jordan Bardella, who is only 29 years old.
>> I didn't understand something. Is the leader of the National Rally party Marine Le Pen or this 29-year-old young man?
>> Yes. Well, Marine Le Pen is actually the leader of the party, but Bardella became the general president of the party after the 2022 elections. So, Marine Le Pen continued as the presidential candidate for the party, but Jordan Bardella started to handle the party's affairs. Bardella was born in 1995. He was born in Seine-Saint-Denis. It's a suburb of Paris. Therefore, he is an influential figure among young people and also does not carry the baggage that Marine Le Pen has. That's why, just like Gabriel Attal, he entered the parliamentary elections with fresh blood from the far-right, and on the evening the election results were announced, Bardella gave a very important speech. With this speech, he stated that Macron had become a lame duck and that Macron's leadership did not reflect the demands of the French people. Macron himself called for early elections shortly after this election. This decision for early elections means the following: We said that Macron lost his absolute majority in parliament in 2022. On top of that, the defeat in the European Parliament pushed Macron into a position where he hoped to create a republican front against the rising far-right and gain the support of the electorate. With this, he even hoped to regain the absolute majority he had lost in parliament. But the election held at the end of June was the second blow to Macron within a month. In the first round of this election, the party that received the most votes was again the Rassemblement National led by Bardella. The National Rally party received 33% of the votes in the first round and 37% in the second round. The Left alliance, led by Mélenchon, received 28% in the first round. Despite this, the Left alliance secured the most seats in parliament. The Left alliance increased its number of deputies to 180 with this election. Macron's party, on the other hand, finished third in the election, receiving only 21% of the votes. Their number of seats also decreased to 159. Thus, Macron and his alliance found themselves in a much worse position than in 2022. What followed was like a cascade of problems. Macron could not appoint a prime minister for 1.5 months. During that time, France also hosted the Olympics, and Macron somewhat used the Olympics as an excuse to delay the appointment of a prime minister. Then he chose the prime minister from the Republican Party. Michel Barnier was a deputy from the Republican Party at the time, which had received 6.5% of the vote in this election. That is, he chose a prime minister from the smallest party in parliament. He hoped to gain the support of the right-wing in parliament this way. But Michel Barnier's premiership also lasted only 3 months. We did a live broadcast during Barnier's resignation. There, we shared a speech where Barnier made fun of Gabriel Attal's premiership lasting only 8 months. Michel Barnier's premiership lasted even shorter than Gabriel Attal's, who preceded him. In fact, both Michel Barnier and his successor, François Bayrou, had their most debated aspects regarding draft budgets. What caused Michel Barnier's government to fall was his inability to get the 2025 budget accepted by parliament. He had prepared a savings package of 60 billion euros, and both the right-wing and the left-wing objected to this package. The reason for the right-wing's objection was their attempt to increase taxes, while the reason for the left-wing's objection was their attempt to cut social spending. However, at the same time, we also observe that the voter base of the National Rally party at that time consisted of the working class and even the unemployed. They also criticized Michel Barnier for cutting social spending. In fact, after Michel Barnier attempted to pass the budget using 49.3, a motion of no confidence was presented to parliament against him. This was presented by the Left alliance. However, Marine Le Pen and the National Rally party also voted against the government in this vote of no confidence, and Michel Barnier's government fell in December 2024. Then came François Bayrou. Bayrou prepared a provisional budget. France was actually without a budget until February 2025. However, discussions continued in France, and the Bayrou government was aware that it was based on a weak and fragile foundation. Precisely for this reason, before entering the autumn period when budget discussions would begin in parliament, the François Bayrou government decided to hold a vote of confidence. What does this mean? François Bayrou had designed a budget. This budget proposal contained savings of approximately 50 billion euros. To strengthen his hand before submitting this saving to parliament's approval, he requested a vote of confidence from parliament. In doing so, he argued that this bitter pill he had written was important for the country's future. However, François Bayrou's government also failed the vote of confidence. The government fell with a heavy defeat on September 8th, and then we arrived at today. The political instability part is summarized like this. In the last two years, France has seen five prime ministers: Élisabeth Borne, Gabriel Attal, Michel Barnier, François Bayrou, and most recently Sébastien Lecornu. And all five of these prime ministers were struggling with the same crisis. So, what do we mean by France's debt crisis? The story here is as follows. France currently has a public debt that has reached 117% of its national income. Along with this, France's growth figures are not encouraging at all. Because the budget can run a deficit, and the state can continue to borrow. But you need to have growth figures that can finance this borrowing. That is, while your debts are increasing, you also need to grow as a guarantee that you can repay those debts. In France, both debts are rising, and growth figures continue to fall. We also see low employment. Consequently, the stagnation in production in France also creates a social consequence. With falling employment, the problem of unemployment spreads to wider masses. So, when we say state revenues are decreasing in France, what do we mean? Actually, there could be two reasons for this. One, the incomes from which the state can collect taxes are decreasing. That is, France's production is falling. But two, the state has given up collecting some of the taxes it could collect. Actually, the second is happening in France: significant tax cuts have been made since Macron came to power. What is the reason for this? That is, why would the state give up collecting taxes for no reason? Why would it give up collecting more taxes? This sentence naturally sounds surprising to us. But the story in France was this: When Macron came to power, France was entering a period of economic stagnation, and Macron believed that the way to overcome this stagnation was to reduce taxes, thereby enabling capital to invest more and create jobs. But these tax cuts made by Macron did not result in an increase in production as expected. Consequently, there was a significant decrease in the state's tax revenues. Let's look at this point by point. Between 2018 and 2023, there has been a tax reduction reaching 62 billion euros as of 2023. This corresponds to 2.2% of France's national income. We see that the corporate tax rate has been reduced from 33% to 25%, costing the French state 11 billion euros. Incentives and cuts are also made in production taxes, costing the state up to 10 billion euros. But the most controversial issue was the abolition of the wealth tax in France. Instead, a more limited property wealth tax was introduced, and this change cost the French state more than 4 billion euros in total.
>> White, I see a pattern here. When Macron and Trump came to power, they reduced taxes for various reasons and under various pretexts.
>> Yes. When they came to power, they were similar, and at that time, we basically see this: there is a decline in production in Western developed capitalist countries. What did countries do to reverse the decline in production? First, they listened to businessmen. Businessmen said, "We pay too much tax. If you tax us a little less, we will reinvest it. We will create employment." Therefore, they built an argument that taxing the rich harms the poor, an argument that is still being made by Bernard Arnault, France's richest businessman. But after 2017, these tax cuts did not work in France. We saw them work in the US. But I think there are different reasons for their success. One of them is that the tax cuts, the carrot there, were supported by other sticks. In Trump's first term, what was this stick? For example, Trump said he would impose new import taxes on companies producing outside the US. But I think a second reason is more important. The US has an advantage over France, such as having a reserve currency. That is, the control of the dollar is in the US. Therefore, when the US prints dollars and lowers interest rates, it does not experience significant depreciation due to high global demand. This also gives the US an advantage in being able to lower interest rates to attract investment. France, on the other hand, cannot be said to be an economically sovereign country like the US. For one thing, the European Central Bank prints the money. That is, France cannot determine on its own how many euros there will be or what the interest rate will be. Moreover, the scope of the euro's use is not global like the dollar. Therefore, what Trump did in the US worked much more effectively compared to what Macron did in France. What Macron did in France backfired. That is, we went to a situation where tax revenues did not increase, but expenditures did not decrease either, and France was caught off guard by the COVID pandemic in 2019, resulting in a huge budget deficit.
>> And of course, there is what we call the agglomeration effect in the US, which we always discuss. That is, today, the world's leading technology companies, financial firms, and highly capable individuals who want to conduct scientific research prefer the US. Therefore, the advantage of returning to the US is much greater than the advantage of returning to France.
>> Yes. Well, we need to talk about this here. It's not a situation unique to France. Europe is experiencing a serious lack of competitiveness. I don't know when you would date the beginning of this, but there is an innovation crisis in Europe that deepens every year. Macron was someone who came to power with the claim of reversing this. He even said he would make France a country of entrepreneurship, a startup nation. That was his slogan. But as you said, he could not create this agglomeration effect in France. Or if he did, it was limited to very few sectors. Because France is still not doing badly compared to other European countries in attracting technology investments or technology capital. When we consider the space industry, aviation, or IT, we see that France has a very serious university infrastructure and a very significant source of trained personnel. But France's problem is the problem of retaining the startups you create in the country when you have a competitor like Silicon Valley in the US. Germany is also facing this problem. Other European countries are also facing it. A startup can be born in Europe. It can even benefit from incentives and have a good incubation period in Europe. But when it reaches a certain level, above a certain investment level, it becomes a unicorn and goes directly to Silicon Valley. This is a serious problem. But technology is not the only problem France is facing. We also see that France has lost its former strength in its classic industries. What is the first example that comes to mind? The automotive sector, for instance. Although not as strong as Germany, France had a strong automotive sector with Renault, Citroen, and Peugeot. And looking at the volume of this automotive sector, we see a 60% decrease in the number of cars produced in France between 2003 and 2023, over 20 years. This is a very significant shrinkage figure for a sector. Besides automotive, what other sectors are prominent? Cosmetics, for example, or the pharmaceutical sector. These are sectors where France excels, and in all of these sectors, we see a France that has drifted away from global competition. Looking at the reason behind this, we actually see this: France's industrialization strategy is based on producing one company from each sector that can be globally competitive, and these companies are generally unrivaled within the country. That is, there is one large company, and perhaps medium-sized companies below it. And France essentially leaves global competition to these companies. Two things are missing here. One, there is no clear sector selection. Therefore, we see that a compact system based on SMEs, expanding around that sector, has not been established. In France, there is a situation where the most prominent companies are globally competitive. Two, the absence of a selected specific sector also means that investment in France cannot be channeled to a particular area. This results in the following: if these globally competitive companies fail, that sector begins to collapse entirely in France. Because that sector depends on one company, not ten, and this creates fragility within itself.
>> Is this actually becoming a disadvantage of early industrialization?
>> Yes. Well, what is important here is that early industrialization means that labor costs rise over time. Especially if you aspire to be a welfare state, labor costs increase further. This means that countries with cheaper labor that can compete globally surpass you. France could not escape this. Neither could England. Nor could Germany. Only the US seems to be able to escape this right now.
>> And it also seems to me that France's project of nurturing great champions, which it started in the 1960s and 70s, actually bore a lot of fruit in the 80s and 90s. TGV, Airbus, these propelled France forward considerably at that time.
>> Large giants inevitably become sluggish at some point. We saw this in Japan, we see it in France. We talk about similar things for Germany. It seems that in 2025, we are experiencing this: the world is taking a significant leap forward in many sectors, and most of the firms that can make this leap are firms founded in the 2000s and 2010s. For example, the old German automotive giants are not as successful as the Chinese in electric motors because they struggle to set up production lines from scratch, or Chinese firms are more successful at building something from scratch. Therefore, again, we don't see a situation unique to France here, but we see it most in France. A syndrome of falling behind in such a technological breakthrough. Many countries are experiencing this.
>> We can actually call this the entropy of the economy. There is even a book called "The Entropy of the Economy." In summary, it explains this: Until now, we have always learned that there are developed countries and developing countries. And of course, there are countries whose development we have given up hope for. And while we expect developing countries to reach the level of developed countries, we assume that developed countries will always remain there. However, let's think of it like an organism. It grows, matures, and then begins to age and decay.
>> You've brought us back to Ibn Khaldun again.
>> Yes. We've returned to Khaldun. We are going through a period where all our assumptions about developed countries on a global scale are being broken. Because the institutionalized structures in these countries cannot adapt quickly to systemic changes. Therefore, developed countries are also starting to become countries that are losing their development. We didn't sink Japan, Germany, and England for nothing. We are sinking France with the same story right now. These countries reached saturation at some point, and there is a sluggishness brought about by this saturation. But on the other hand, we said state revenues have decreased. Let's turn the topic back and look at expenditures, because France has been known as a social welfare state since the 1970s. In fact, perhaps after World War I, like all European countries, France also had a social welfare state implementation. But France was not a country that spent and borrowed as much relative to its national income at that time. For example, in 1980, France's public debt-to-GDP ratio was only 21%. Even consider the Maastricht Treaty, the economic constitution of the European Union. The limit was 60%, and there was a 3% annual budget deficit limit. We need to remember that France is currently at 117% of this level and has an annual budget deficit of 5.5%.
>> France is like a man who lets himself go after getting married.
>> Like that. But here's what we see: what is included in public expenditures and how much they have changed over time. Firstly, the most important issue that distinguishes France from other European countries is the high level of social security expenditures. France allocates 34% of its national income to social security expenditures. In this regard, it ranks second after Finland. This is not a comparable level to Germany and others. The average for the Eurozone is 29.5%. So, we see a 5-point deviation. Of course, the important items within these expenditures are pensions, healthcare services, and housing benefits. We need to remember that these three issues have been subjects of debate during Macron's term. The pension law, meaning the increase in retirement age from 62 to 64, caused major protests in France, and it was finally legislated to be implemented only after 2030. But significant cuts were also made in healthcare expenditures, and these cuts also met with major protests. So, in France, these social security expenditures are being tried to be reduced, and this raises a question among the public: Does the bill for the country's economic bottleneck have to be passed on to vulnerable groups? Does it have to be passed on to retirees or the poor who want access to healthcare services? Therefore, Macron's policies of reducing taxes on the rich while reducing social benefits to the poor are like a reverse Robin Hood story. It's a purely neoliberal story. Of course, looking at the trend of debt over time, we see a jump in the early 1990s. Then, with the 2008 crisis, we see another jump. And finally, with the 2020 COVID pandemic, we see a big jump. After all these jumps, public expenditures struggle to return to their previous levels. In fact, the problem France has faced since 2022 is its inability to bring the social security expenditures made by the state during the COVID period back to pre-pandemic levels. That is, we say that public expenditures have not decreased in France in the last 5 years, they have even increased, but this increase is compared to pre-pandemic levels, or if we look from 2022 to 2023, and from 2023 to 2024, we can see annual decreases in some areas. It's just that these decreases have not returned to pre-pandemic levels. Therefore, in 2023, the budget deficit was 5.5%, which was 154 billion euros. In 2024, this increased to 170 billion euros, becoming 5.8% of national income. As of August 2025, this figure is 157.5 billion euros. That is, in the first 8 months of the year alone, there is a budget deficit of 157.5 billion euros in France. We cannot yet predict where this will stand by the end of the year, as estimates are constantly being exceeded. To summarize, we see a scenario here: When Macron first came to power, he thought he could increase employment and investment by reducing taxes. While doing these, he had not found policies to reduce costs. His solution was to raise the retirement age on the one hand, and on the other hand, to introduce new tax items such as new taxes on fossil fuels for decarbonization, which were met with major backlash, such as the Yellow Vest protests and pension protests. Therefore, whenever Macron tried to reduce the cost of government, especially social expenditures, he faced strong reactions from both society and opposition parties. Consequently, he could not legislate and implement the policies he wanted. On the other hand, there was the impact of the pandemic: France was caught off guard by the pandemic. After reducing taxes and decreasing state revenues, many businesses had to close down with the pandemic, and during this time, the state had to provide subsidies to the public and support and incentives to businesses to prevent them from going bankrupt. And the cost of these incentives fell entirely on the public. That is, after reducing taxes and being caught off guard, France, with the COVID pandemic, reached today's debt-to-GDP ratio of 117%. Of course, these were public debts. France is also one of the countries with the largest borrowing rates in the private sector in the world. According to the IMF's global debt database, non-financial corporate debt in France is at 155% of national income. Household debt is at 60.5% of national income, and corporate debt is at 74.4% of national income. Total private debt as a percentage of national income in France is 215%. So, here we see that both households and the private sector in France borrowed during the era of cheap global money, the low-interest period of the 2010s, and that borrowing at that time is now creating financial fragility for France. If those debts were not there, perhaps capital could have borrowed more easily and invested it. But another effect of France being caught off guard by the pandemic is that central banks raised interest rates to combat the inflation that emerged after the pandemic, and the rise in interest rates increased borrowing costs for everyone. France also suffered from this. That is, the debt might have been sustainable, but for that, there needed to be the possibility of borrowing again. As borrowing again became more costly, we see that France's old debts turned into a bigger problem. You can actually understand this by looking at 10-year bonds for public debt. That is, France today is a country that can borrow at a higher cost than Greece in the Eurozone. It's competing with Italy. I won't even mention comparing it to Germany. Because looking at the difference between Germany's debt-to-GDP ratio from 2001 to the present, it has increased by 8%. In France, this rate is 53%. That is, compared to Germany, France is borrowing much faster and has a lower growth rate than Germany. You know, you might say, "I will earn more. So, there is no problem with my borrowing." But in a scenario where you cannot earn more, borrowing becomes a serious burden for you. But the budget crisis is not the only problem. Borrowing is not the only problem. There is also no growth in France that can make this borrowing sustainable.
>> Perhaps we should also emphasize here that what is increasing all these input costs is the rising energy prices in Europe. That is, after the Russia-Ukraine war, we saw a Europe with increasingly limited access to natural gas and oil. Germany bore the brunt of this, but France was also one of the early players in this race.
>> Yes, well, there is this here, which is important in two aspects. One is energy costs. We will see how this affects growth and production. But France was also one of the important countries supporting Ukraine. That is, especially after Merkel, France was trying to increase its role within the European Union. Macron, here, felt compelled to increase defense spending and aid to Ukraine. Even this year, Macron was discussing whether to send troops to Ukraine, for example. That is, this issue was discussed in France. Of course, it was met with strong opposition from some segments. But we were in a period where France had to increase its defense spending due to Ukraine and the new conditions imposed by NATO. Therefore, as you said, defense was added to the cost items due to the Russia-Ukraine war. But let's come to the growth part. Here again, we see that France is not reaching its expected growth figures. There are several reasons for this. First, the stagnation that France already had before the pandemic. Second, the pandemic itself. As we said, shops were closed with the pandemic. Trade stopped. Tourism, a very important source of income for France, was completely dead for two years. Therefore, all of these were reflected in France's growth figures. In 2020, France showed a contraction of 7.6%. In 2021, the recovery of growth was not as fast as expected. That is, there was only 6.8% growth. This shows us that France has not returned to its pre-pandemic level. We expected growth to normalize in the following years. However, in 2022, growth in France remained at 2.8%, in 2023 at 1%, and in 2024, according to different reports, at a level of 0.5% or 1.1%. So, why did this happen? The reasons are, as we mentioned earlier, the pandemic, the Russia-Ukraine war, and the increase in energy costs. Therefore, this led to a decrease in production in France, as it did in the rest of Europe. And then, as we explained earlier, the issue of France, as a developed economy, drifting away from global competition. In 2024, we have a picture like this: 170 companies closed in one year, and a total of 24,000 employees were laid off, just in the industrial sector. Now, we have talked about the weakness in growth figures. This naturally weakens employment figures and, consequently, increases unemployment. Unemployment was already a serious problem in France before the pandemic. That is, there was unemployment above 8%, approaching 10%. When Macron came to power, he was also looking for new policies to increase employment to solve this unemployment problem. And here, he saw two culprits. One, we spend too much on social security. This prevents people from working. They don't work because they are already earning. Second, we also tax companies too much. Therefore, it is an obstacle to their investment. To break this cycle, Macron
We have already explained that although all these policies were implemented, what was implemented did not work. So how did the course of employment change? Let's start by considering the post-pandemic period, for example. In France, the unemployment rate in 2023 is 7.2%. We see that real growth between 2023-2024 is only 1.2%. This naturally causes unemployment to rise to 7.4%. Growth projections for the coming years are also at low levels. This leads us to expect high employment loss and rising unemployment in France in the coming years.
Perhaps we need to consider these macroeconomic data alongside France's social problems. Because we see social unrest in France, which has become almost a rhythm every two years. Especially young people of immigrant origin in the banlieues take to the streets. They express their problems related to justice, recognition, or identity. They even cause a lot of destruction. On top of that, there is a serious social crisis. So, we are actually seeing a series of crises in France where the economy and social structure are intertwined.
Yes. On one hand, there is the unemployment problem of young people in the banlieues, and this unemployment combines with lack of education, with the weakness of the social structure, and sometimes turns into violence. This is one issue. On the other hand, we see the problems faced by people of French origin. In fact, the problems faced by these two groups and their transformation into social unrest are reflected in the rise of both the National Rally party led by Marine Le Pen and the left-wing parties. Now, when we look at the last 10 years, the issues that come to mind regarding France are always protests, as you said. But what was inside these protests? Let's think about it and try to understand who participated. The first were the Yellow Vests, for example. The Yellow Vests were actually independent of identities. They concerned everyone living in the banlieues, which are far from the metropole in France. Let's say you work in Paris or Lyon, but housing prices there are high. Therefore, you commute to work by car. Now, a new tax on the fuel you use makes your commute to the city more expensive. This is a situation that poses a problem not only for work but also for your participation in social life. That's why we saw both people of French origin and people of immigrant origin protesting together during the Yellow Vest protests. Or later, the protests against the pension law also turned into protests with people of different identities participating together. But there are some issues that can divide society in France over issues like anti-immigration sentiment or identity problems, and we can see this division very clearly in politics. For example, anti-immigration sentiment is associated with what? In France, some regions have been more negatively affected by globalization geographically. Globalization meant job loss for some regions. This was an inevitable neoliberal problem in France, just as it was in Germany and the UK. And we saw how this problem was responded to. French people who said, "Immigrants are taking our jobs," looked for a new party for themselves. And that party turned out to be Marine Le Pen's National Rally. But on the other hand, there is the simmering unemployment problem in the banlieues, or the problem of not being able to be included in social life. We see that this triggers a completely different social crisis. We saw the biggest example of this after the murder of Nahel Merzouk. After the murder of Nahel Merzouk, a 16-year-old Algerian youth, by the police, there were widespread acts of violence throughout France. This showed us how the excluded segments of society in the banlieues express themselves with anger. In fact, all these social explosions show us this: There is a central politics in France, and this central politics has not been sufficiently capable of including the people on the periphery of society in politics. Here, we see both the French lower-middle class, which has lost its economic power, becoming disillusioned with politics, and the young people in the banlieues or immigrants in the metropoles, who feel excluded from the system both economically, socially, and politically, turning towards left-wing movements like La France Insoumise.
I think France is in a national crisis. There is a national identity crisis. France hosts the largest Muslim community in Europe, but on the other hand, it has a historically very secular and republican vision. This, in itself, creates tremendous conflict and tension. But beyond that, what does it mean to be French? Who do we call French today? What kind of inclusive identity is France creating? These are big question marks. We are already seeing the biggest examples of this in the current French parliament. There is still a very serious headscarf ban, right? When we put these together, I think France is experiencing the biggest national crisis in Europe. This also incredibly undermines the motivation and ability to act together.
Yes. There is actually a story here. The immigration law was debated for 1.5 years. You will remember. The biggest issue was this: France has been a country with high imperial ambitions until now. It had the confidence that it would accept immigrants from its former colonies and somehow turn them into French people. But at the point we have reached, it is thought that those coming to France from abroad are having difficulty adapting to French society. In other words, France no longer has as strong an assimilating culture as it used to. The French state does not feel as successful as it used to in integrating or assimilating, if you want to call it that, and it is not successful. This inevitably creates an identity crisis. It is not talked about much in the context of France, but France also has overseas territories all over the world, and we are seeing more and more rebellions and protests for separation from France in these overseas territories. Perhaps in the future, there will be independence referendums in these territories, and France will lose them.
You made a video last month about France's defeat in West Africa, in which you explained how former French colonies in West Africa expelled France from their countries. There is no guarantee that a similar scenario will not happen in New Caledonia, for example. Of course, France is very powerful there now. It can even exert such great pressure as to ban people from taking to the streets. But over time, France might think that these overseas territories bring more cost than benefit, just as the DGO did at the time, and withdraw from them. In fact, when we talk about the crisis of the Fifth Republic, the crisis of French identity, France also has to answer this question: How will we legitimize our presence in our overseas territories? How will we make the people living there accept that they are French? This is a serious crisis. Because, as I said, this crisis is not only in the overseas territories. It is a crisis happening precisely within France. France has to redefine its French identity with such a large immigrant population. Because all of its citizens must feel French. If those citizens do not feel French right now, the problem lies within the definition of French itself, and this is one of the reasons why the political divisions we are discussing today have reached an irreconcilable point.
I think this emphasis on irreconcilability is important. Because when we talk about France's inability to be governed or France's collapse, we see parties or blocs in domestic politics that cannot respond to this. Here, we need to emphasize those lines of irreconcilability. There are actors in energy, economy, politics, and geopolitics who are very contradictory and cannot sit at the same table.
Yes. When we look at the parliament, we see a story of four blocs, one of which is small. We call one of these four blocs the center, the bloc around Macron. And we call another the left alliance, within which there is a distinction between the Socialist Party, which is more center-left, and La France Insoumise, which is more far-left, but they have managed to reach an agreement. And directly opposite them is Marine Le Pen and her National Rally movement, a political party currently led by Bardella. There are also the Republicans, who are closer to the center-right, the on-the-ground equivalent of the Socialist Party. So, can these structures reach an agreement, even enough to form a coalition in parliament? No. There is only one scenario where these structures can reach an agreement. For example, if the left party initiates a no-confidence vote to overthrow the government, Marine Le Pen's party can support the left party. The only reason for their support is to overthrow the government. Here, irreconcilabilities may not be understood through abstract concepts like left and right. As you said, we need to read this through concrete policies. I think if we fundamentally make the distinction between central politics and newly emerging parties, we see this: Central politics in France is intertwined with the European Union. So, when we talk about Macron today, or the Republican Party, or the Socialist Party, we are actually talking about center, right, and left parties that have embraced the European Union. The distinction here is in both the National Rally and the La France Insoumise movement. Both of these movements are against the European Union. They think that the European Union violates France's sovereignty. But here, when we say sovereignty, we are not talking about something abstract. For example, when we talk about France's economic crises today, what did we say? France is borrowing, but it cannot determine its own borrowing interest rate. France has to manage its economy within the conditions set by the European Central Bank. Therefore, if it is to enter into quantitative easing or monetary tightening, it is not France that decides, but the European Central Bank. Here, perhaps the first distinction needs to be made between this technocratic, pro-European Union central politics and the new political movements. But these new political movements are also completely irreconcilable within themselves. That's why we place one on the right and one on the far left. We mentioned the position against the European Union or the issue of sovereignty here, but there is also an economic distinction. Between central politics and these new political movements. That economic distinction also shows us the voter bases of these movements. Today, the center-right or center-left or Macron are no longer parties that can get votes from workers. Even the Socialist Party struggles to appeal to workers. But we see that Marine Le Pen can do this. For example, a French citizen, you lost your job because immigrants took your job. So, we see that the segments who lost their jobs as a result of deindustrialization can vote for both the La France Insoumise movement led by Mélenchon and the National Rally party led by Marine Le Pen. The 2024 election was interesting in this regard. We saw a higher than expected vote transfer between these two parties, which are called far-right and far-left. But this is not the only distinction. On the one hand, you look at energy policies. For example, La France Insoumise is clearly against nuclear energy, while Le Pen and Macron are positive towards nuclear energy. This actually shows us that these parties do not agree on critical strategic decisions.
In the macro picture, I think this: You said these central parties are very pro-European. Actually, there is a story that is ending. We always talk about this. There is a story that is ending in the world, and the central parties want to continue this ending story. On the other hand, the parties that offer alternatives to this ending story seem very alien and frightening to France's elites, its political order, and its economic machinery. Therefore, they try to continue this finished story as much as possible. That's why the wreckage grows bigger every day. For example, if France had made this critical transformation five years ago, it might not have been buried under such a large wreckage, but they will try to carry on for another five years, and it will break from a much larger point in 2030. Yes. Let's speak frankly. The semi-presidential system itself is part of the problem in France. How does Macron come to power? How does he stay in power? He presents himself as a candidate who will keep a broad electorate away from the threat of Marine Le Pen, right? And this actually shows us that he is not such a strong actor in himself. And there is also a scenario where the government is responsible to the parliament. Therefore, within such a fragmented structure of parliament, the government also becomes a lame duck that cannot make the decisions it wants. To solve this, perhaps France could have abandoned the semi-presidential system in time, but as long as the semi-presidential system is not abandoned, it becomes even more difficult to abandon this system. Why? Because the two most important candidates in the next election period will likely not be from the central parties. That is, we will see Mélenchon on one side, and Le Pen, or Bardella if Le Pen is banned from politics, as presidential candidates on the other. And in a scenario where these two candidates compete in the second round, no one will say, "Let's abandon the semi-presidential system and switch to a presidential system." No one in France, I mean the current ruling elites. They will not want to give all the power to these people. So, what will you do? Will you transfer power to parliament? That's also meaningless. Because parliament is already in a fragmented structure. Only and only when the center completely collapses will parliament perhaps become functional. But even in that scenario, who will be at the head of the executive will be the most decisive question. For example, a scenario like this might emerge: Let's say in 2028, the National Rally makes a big leap in parliament, but in the presidential election, to prevent Le Pen or Bardella from being elected again, Mélenchon wins in the second round. That is, a leftist president but a parliament with an absolute majority of the right-wing party. In such a scenario, we will see the crisis of France's inability to be governed continue. That is, today's irreconcilabilities deepen tomorrow's crisis. For example, when we are making this video, Sébastien Lecornu is the Prime Minister, but perhaps in 3 months, we will see him overthrown. Therefore, the problem is not just the economic or political issues we have listed. It is the crisis of instability created and continuing to be created by this multi-party structure in parliament or France's inability to determine its direction.
This period reminds me a bit of France before World War I. Leftists blame the rightists. Rightists blame the leftists. When trying to understand the mistakes that led to Hitler's invasion of France, the rightists say, "You passed too many reforms. This reduced military spending. It caused serious strikes. Workers' rights expanded. That's why we couldn't prepare enough." The leftists say, "We did it because of you. You became collaborators." We see a France that failed in terms of weapons, operations, economy, economics, and social reforms throughout the 1930s. And that, in turn, resulted in a very serious occupation. So, there is a France that is not prepared for where the world is heading. Due to the fight and struggle of the elites.
Yes. Reyhan also compared this period to Turkey in the 70s and 90s. Moments of such indecision can indeed be very decisive for a country's fate. Because normally, we could have discussed this: France has economic problems, and these problems can be solved with technological innovation, with strategic investments in a defined sector, and so on. We cannot say this for France right now. Why can't we say this? Because for a strategy to exist, there must be a political will that can put that strategy forward. And France's crisis stems precisely from the loss of this political will. The scenario of this continuing for a long time presents us with a story that will prolong France's exit from its crisis. Perhaps even the worst options for the French voter today might be better than remaining undecided tomorrow. As we say, even the worst decision is better than indecision. Today, for someone in the center-right, Mélenchon might be the biggest disaster that could happen to France. But tomorrow, that person might want to see Mélenchon instead of Le Pen. And perhaps in the meantime, there might be solutions to the problems. The opposite could also happen. We might see Le Pen or Bardella coming to power strongly and solving economic problems. But right now, they are all undermining each other. It looks like they are all preventing each other from working.
We have had three videos about European countries on the channel. I did Germany, Ömer did the UK. Ömer also did Greece. But I don't categorize them as big countries. It would be a miracle for Greece to recover, not to sink. Yes. So, we have examined the three largest countries in Europe, and I will ask you to make a comparison. Which country is in the worst situation, and which country has a high potential to escape this predicament? How do you compare France, the UK, and Germany?
I would say this: Germany still has the highest probability of escaping this predicament. Despite this entire deindustrialization process, Germany was the first and most strongly hit. Because it had a strong industry, and that strong industry has now taken a blow. But when we look at France, for example, the share of industrial production in GDP is almost half compared to Germany. The share of industry in French GDP is around 13%. In Germany, it is over 25%. Let's look at the UK. The UK also has an advantage. With Brexit, it has suffered significant damage from leaving the European Union. It still has problems with customs duties. Consider the taxes imposed on steel, etc. It's very fresh. We have a UK that struggles to sell to the European Union, but it can make its own financial decisions. Therefore, it has found an area of sovereignty for itself. At least it has the potential to solve its problems within that area of sovereignty. Coming to France. France has not become the strong actor it once dreamed of within the European Union. It has remained with its ambitions in foreign policy, and its inadequacy was already evident. On the one hand, we look at the economy. We have a country with a shrinking industry, which has not delivered what was expected in innovation. For France to get out of this, a significant investment transformation is needed. And this is not possible at a time when access to finance is difficult globally. Therefore, I see France as the country with the darkest near future. Frankly.
Germany also seems to be in the best situation to me, but the UK and France are in fierce competition. It's even funny. They are constantly fighting over migrants crossing the English Channel. A fight is going on over a few million euros. These two countries, once dominant countries, especially in the 19th century, are now slowly being left to their fates. I always say that in 15-20 years, we will be talking much more about India, Indonesia, and even Nigeria and Brazil than these countries.
Yes. In the middle of that video, we talked about an entropy economy. Indeed, we see that the countries that entered the race for colonialism in the last quarter of the 19th century are now in a race for stagnation, a race to the bottom. The countries you mentioned will indeed be talked about much more than France and Germany in the coming years. As Turkey, due to our neighborly relations with Europe, we are forced to talk about France, Germany, and the UK. Because we are not considered defeated just because the Germans are defeated. We can be considered defeated when the French are defeated. We can be considered defeated when the British are defeated. Because their importance in the global economy is decreasing. When our biggest trading partners are getting poorer, we face a new problem: "Who will we sell our goods to?" That's why we are not explaining these stories of collapse by saying, "Things are going well in Turkey. Look, France is very bad. Let's be grateful for our situation." On the contrary, we are saying, "Even France is in this state, Germany is in this state. Turkey's future might be even darker. Let's try to understand this."
Returning to France, as we conclude, what do you think about the French political class? Because Macron, a name and surname not widely known, suddenly transformed from Minister of Finance to a leader who has governed the country for 10 years. Yes. The French political class is generally born from elite schools, graduates of the most elite schools, and then gains private sector experience here and there, working in large French companies. A politician is born, a technocrat, even if not popular. Do you see this as a leader, or do you see a more charismatic leader who will transform France? In short, will we see the end of the Fifth Republic, and will a charismatic leader bring about this end, or will the crisis lead us to this crumbling?
Yes. Let me conclude this question with an anecdote. We took the 49W course in 2017, which was Macron's first year in power. At that time, Professor Huri, while talking about Macron, said he was the man that European capital wanted and needed. This was not a compliment. He said, "European capital is tired of taxes right now, so Macron came to lighten their tax burden." As you said, he is a former finance minister, a complete technocrat, but a figure whose political popularity is declining day by day. What I see in France is this: The credibility of technocrats is completely gone. Instead, we are entering a period where younger, more right-wing figures are gaining influence, though I'm not sure if they are charismatic. Because French politics, before our eyes, is also a sign of generational change. Gabriel Attal, for example, the previous Prime Minister, was 34 years old when he took office, or Sébastien Lecornu will be Prime Minister at 38-39 years old. Let's look at the opposition leader. Bardella is a politician one year younger than me and is the leader of the opposition and the leader of the largest political party in France. Therefore, I think that in the coming years, especially if La France Insoumise can field a new young generation figure to replace Mélenchon, we will see the movement of a brand new political generation. This new political generation, let's call them Generation Y of France, will largely transform French politics, and I think this transformation is coming from the grassroots.
Shall I leave a bombshell question for the viewers? Yes. Let's end the video with that. The European young politicians we said were losing dynamism are producing them, while the leaders of increasingly dynamic countries like India, China, and even the US are over 70 years old. Let this be a question and something for them to think about. Let it be. I'll ask one last question, and we'll close the video. The new Prime Minister, Sébastien Lecornu, will complete his first month soon. How many months do you give this government? Because last year we bet on Barnier's government lasting less than 8 months, and indeed that government fell in 3 months. I don't think Lecornu's government will see the end of the year due to budget discussions. You can also share your comments. See you in the next videos. Enjoy watching. Yeah.