How France is becoming a 'third-world' economy - CaspianReport [View all]

Summary of France's Economic Crisis

This video analyzes France's deepening economic and political challenges, arguing the country faces a "slow-motion collapse" despite its wealth and global influence.

Three Interconnected Crises

1. Demographic Crisis
Fertility rate dropped from 2.0 (2010) to 1.6 (2024), with births declining 20%
Worker-to-retiree ratio collapsed from 5:1 (1990) to nearly 2:1 today, heading toward 1.5:1 by 2040
Productivity growth stagnated at 0.3% annually (half the OECD average)
Pension system now consumes 14% of GDP—more than education, defense, and transportation combined

2. Industrial Decline
Manufacturing share fell from 26% (1980) to 13% today
France lost 900,000 manufacturing jobs after the euro's introduction
Labor costs are highest in the eurozone (50% above gross salary vs. 30% in Germany)
Major companies (Michelin, Renault, Peugeot) relocated production to Eastern Europe and Morocco

3. Political Paralysis
51 consecutive years of budget deficits; debt tripled to €3.4 trillion over 25 years
Seven prime ministers since 2017, none delivering lasting reforms
Parliament fragmented across five blocks with no majority
Anti-establishment parties (far-right and far-left) now command over 50% support, blocking comprehensive reform

Market Consequences

France's bond yields have risen to 3.2% (highest since 2012), with the spread over German bonds approaching 80 basis points. The country violates EU fiscal rules with 6% deficits and 113% debt-to-GDP ratio, projected to reach 125% by 2030.