France, long considered one of the economic pillars of Europe, is increasingly displaying signs of relative decline within the European Union. The latest data from Eurostat confirms that for the third consecutive year, the GDP per capita of France (adjusted for purchasing power parity) has been below the average of the EU, firmly placing it in what economists term the “second tier” of the EU.
With the EU average indexed at 100, the current position of France is 98, while that of Germany is 111 and the United Kingdom is 99. More alarmingly, France has fallen behind Cyprus, which was considered a peripheral economy in the EU just two decades ago. This is not just a statistical oddity. When countries perform below average for several years, it is a sign of structural stagnation rather than cyclical problems.
Italy Closes the Gap as France Stagnates
France’s relative decline becomes clearer when compared with Italy — a country long portrayed as Europe’s economic laggard.
According to the latest purchasing power parity figures:
- France: $59,683 GDP per capita
- Italy: $59,453 GDP per capita
The near-parity is all the more impressive, given that Italy started the euro zone crisis with much weaker fundamentals. Italy’s convergence is a result of a combination of fiscal discipline, export performance, and industrial recovery post-pandemic, whereas France has been struggling to convert high public expenditure into productivity gains.
A High-Spending, High-Tax Model Under Strain
France already has one of the largest public sectors in the developed world. Public spending now exceeds €1.7 trillion, representing well over 55 percent of GDP, a level surpassed only by a handful of advanced economies.
Under the newly passed 2026 budget, spending will increase by an additional €38 billion, despite France facing:
- Sluggish growth (below 1.2% projected)
- Rising borrowing costs
- Growing pressure from EU fiscal rules
Rather than reining in expenditure, Prime Minister Sébastien Lecornu’s government has leaned heavily on taxation:
- €6.5 billion in additional taxes on wealthy households
- €7.3 billion in new corporate taxes
- Tax revenues projected to reach 43.9% of GDP, among the highest in the OECD
This approach reinforces a long-standing criticism of France’s economic model: the state absorbs a growing share of national wealth while delivering diminishing returns in competitiveness and growth.
Debt and Deficit: Warning Lights Flashing
France’s public finances are deteriorating faster than previously acknowledged.
Key indicators:
- Budget deficit: revised upward to 5% of GDP, well above EU limits
- Public debt: approximately €3.4 trillion, exceeding 110% of GDP
- Debt servicing costs: rising sharply as interest rates normalize
The government initially pledged to reduce the deficit through spending cuts, but political concessions — particularly to the Socialist Party — led to the abandonment of structural reforms, including pension adjustments.
As economist Nicolas Baverez warned in Le Figaro:
“France has become the Argentina of Europe — locked in an infernal spiral that leads to third-world status.”
While provocative, the comparison reflects fears of chronic deficits, rising debt, and political paralysis, rather than immediate economic collapse.
Political Instability Weakens Fiscal Credibility
France’s fiscal troubles are compounded by political volatility.
Since President Emmanuel Macron’s decision to call snap elections in 2024:
- Two prime ministers were ousted over failed budgets
- Lecornu briefly resigned before being reappointed
- The government now governs from a position of extreme parliamentary weakness
Lecornu himself has acknowledged leading one of the weakest governments of the Fifth Republic, undermining France’s credibility with investors, credit rating agencies, and EU partners.
Demographics: A Silent Economic Drag
France also faces a demographic turning point with serious long-term consequences.
In 2025:
- Deaths outnumbered births for the first time since WWII
- Natural population growth turned negative
- Overall population growth is now sustained only through immigration
An aging population places additional strain on:
- Pension systems
- Healthcare spending
- Labor market dynamism
Without productivity reforms or higher labor participation, demographic decline threatens to lock France into low growth and high fiscal pressure for decades.
Institutions Sound the Alarm
France’s own fiscal watchdogs are increasingly blunt.
Carine Camby, interim chair of the Court of Accounts, warned:
“It is urgent to act vigorously to reduce our deficit, control expenditure, and stabilize public debt.”
The Court has repeatedly highlighted inefficiencies in public spending, overlapping administrative structures, and weak evaluation of policy outcomes — problems that persist despite record taxation.
A Model at a Crossroads
France’s predicament is not one of poverty, but of relative decline. The country remains wealthy by global standards, yet it is steadily losing ground within Europe — a far more damaging outcome for a nation accustomed to leadership.
The combination of:
- High taxes
- Expanding public spending
- Political fragmentation
- Demographic stagnation
This has led to a slow process of pauperisation, as described by critics, but not a collapse, rather a degradation of economic power and strategic independence. Without a marked turn towards productivity, fiscal responsibility, and institutional reform, France is in danger of locking itself into a secondary position within Europe, sustained by debt and redistribution rather than growth. The warning signs are no longer theoretical, but are now embedded in the data.
