Please see below, an article from EPIC Investment Partners with their views on the French Prime Minister’s resignation. Received today – 07/10/2025
France’s fifth Prime Minister in two years resigned yesterday morning, making the UK appear a relative haven of stability. Mrs Reeves is wrestling with some frightening numbers prior to another tax raising budget on November 26th, but she must be relieved that she isn’t in charge of the French economy.
In summary:
- The French state forms the largest part of the economy with the highest percentage of total spending in the world at 57%. The UK’s is 44%.
- French debt has edged ahead of the UK. Including off balance sheet liabilities such as pensions, French debt exceeds 400% of GDP
- France has not run a budget surplus since 1980
- The French have the longest retirements in the world, averaging in excess of 25 years.
- France is the only place in the world where the average pensioner earns more than the average worker. The annual cost exceeds 350 billion euros.
- France spends 14% of GDP on pensions vs 8% in the UK, and as the population ages, this cost is crowding out all other areas of public spending
- France’s retirement age is 64
- GDP per capita at $44,000 compares with the US at $82,000 and the UK at $49,000.
- Average French tax rates are 46%. The UK figure is 35%.
- In 2023, average French real wages fell 3.6% while state funded pensions rose 5.3%
- France’s population is ageing faster than the European average. In 1981 there were 5 million pensioners. Today there are 17 million
- French bond yields are now higher than in Spain, Greece and Italy
Absent a decade of explosive economic growth, France’s trajectory is not sustainable, and continuing political instability prevents any meaningful cuts in government expenditure. Being part of the Eurozone will be a mixed blessing. The ECB’s promise to do ‘whatever it takes’ to protect and preserve the Euro was an expensive undertaking when Greece faced similar issues. France, as the second largest economy in the EU, will be totally a different proposition.
The price of an ECB rescue will include the loss of control over government spending, and given the inevitable reaction of the French population to the end of their ‘Social Contract’, a more realistic option could be a return to the French currency. France must have noticed the improvement in the UK’s competitiveness and affordability of its assets to foreign buyers as the Pound fell following the financial crisis in 2008. The alternative could be catastrophic.
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Andrew Lloyd
7th October 2025