David
Good morning 跑了松鼠, I'm David, and this is Goose Pod for you. Today is Thursday, July 17th. Welcome to your personalized podcast experience.
Ema
And I'm Ema. Today, we're diving into a really fascinating and controversial topic: the French government's proposal to scrap two public holidays to help fix its budget problems.
David
Let's get started. The core of this news is a proposal from French Prime Minister Francois Bayrou. He's suggesting a set of austerity measures worth nearly 44 billion euros to tackle the largest budget deficit in the euro area. It's a huge undertaking.
Ema
Exactly! And the one measure that’s grabbing all the headlines is the plan to cancel two of France's eleven public holidays. The idea is to get people to work two extra days a year, which in theory, boosts economic productivity without raising salaries.
David
The specific holidays on the chopping block are Easter Monday and May 8th, which marks the end of World War Two in Europe. It's a bold move, and it’s being framed as a necessary sacrifice to deal with a national debt of 3.3 trillion euros.
Ema
That number is just staggering. I read that France is accumulating 5,000 euros in new debt every single second. When you think about it like that, you can see why the government feels the need to do something drastic. It’s like your credit card bill arriving and it's longer than a novel!
David
A very expensive novel. This isn’t just about holidays; it's part of a larger package. The plan also includes a new tax on the highest earners and a freeze on pension and welfare payments at 2025 levels, which is bound to be just as contentious.
Ema
Oh, absolutely. Freezing pensions and welfare affects people’s wallets directly. But the holiday issue is so symbolic. In France, vacations are practically sacred. So, proposing to take them away, even just two, has caused an immediate and massive public outcry from all sides.
David
It's a "moment of truth," as the government is calling it. They are staking their political future on this budget. But the backlash suggests this particular proposal might have a very slim chance of ever becoming law. The cultural resistance is immense.
Ema
It really is. It’s a clash between economic pragmatism and cultural identity. On one hand, you have the hard numbers of the deficit. On the other, you have the French way of life. It’s going to be a fascinating battle to watch unfold.
David
To really understand why France is considering such drastic measures, we need to look at the historical context of its budget deficit. This isn't a new problem; it has deep roots. France's government budget has averaged a deficit of -2.62% of GDP from 1959 to 2024.
Ema
Wow, so for over 60 years, they’ve consistently spent more than they’ve earned. It's like a family that has been running a small, manageable credit card debt for decades, but recent events have caused that debt to explode. Is that a fair analogy?
David
It's a very good analogy. The situation has had its ups and downs. For instance, the last time they had a budget surplus was in 1959. But the real turning points often came from major crises. Wars, for example, have always been the main source of large deficits.
Ema
That makes sense. Wars are incredibly expensive. I was reading about the Franco-Prussian War in 1871. After that, France's public debt hit 113% of its GDP. The costs were apparently seven times the country's annual budget at the time. That’s an unimaginable financial shock.
David
Precisely. And that event fundamentally changed how France managed its debt, introducing new financial instruments like long-term bonds. Before that, they mainly relied on something called perpetual annuities. The state also became more involved in short-term financing through specific state institutions rather than just the central bank.
Ema
So they had to get more creative with their financing. It sounds like they've tried various strategies over the years. Were there other periods of major debt increase, aside from wars? I know infrastructure can be a big government expense.
David
Yes, especially in the late 19th century with the Third Republic. There was a deliberate policy to invest heavily in infrastructure, particularly railroads. This was a long-term strategic investment but it added significantly to the national debt. It was a conscious choice to use fiscal space for future growth.
Ema
That’s a recurring theme in government finance, isn’t it? Spending money now for a long-term payoff later. But fast-forwarding to our time, what caused the recent, more dramatic spike? The average deficit was around 2.6%, but the current situation seems much worse.
David
The modern crisis has different drivers. The record-low deficit, the largest in modern history, was in 2020, when it reached -8.9% of GDP. This was, of course, largely due to the massive government spending required to support the economy during the COVID-19 pandemic.
Ema
Right, the pandemic threw a wrench in everyone's finances, governments included. So after that huge spending surge, they've been trying to get back on track? It sounds like they haven't been very successful so far, if the deficit is still so high in 2024.
David
Correct. The deficit was 5.8% of GDP in 2024, and it's projected to remain over 5% for the next few years. In March 2025, the government's debt stood at 3.345 trillion euros. The debt-to-GDP ratio is over 113%, which is a very high level and a cause for concern among investors and credit rating agencies.
Ema
So to bring it all together, France has a long history of carrying debt, often due to major events like wars or big investments. But the pandemic created a new, massive hole in the budget, and now they're struggling to climb out of it, leading to these extreme proposals.
David
That is the situation in a nutshell. The current government inherited a structurally difficult situation that was massively exacerbated by a global crisis. Now, they are left with very few, and mostly unpopular, options to try and restore fiscal balance. That's the backdrop for this whole conflict.
David
And this brings us squarely to the conflict. Prime Minister Bayrou's minority government is facing a monumental challenge. Proposing these deep spending cuts has, as one report put it, "thrust the prime minister into the lion's den." A no-confidence vote is now a serious threat.
Ema
A no-confidence vote could bring down the government, right? That’s a huge political risk. It shows just how explosive these proposals are. You're not just annoying a few people; you're potentially ending your own government's term in office. The stakes couldn't be higher.
David
Exactly. The core of the conflict is a fundamental disagreement on who should bear the burden of fiscal consolidation. The government is targeting several areas: public holidays, which affects all workers; the wealthy, with new taxes; and those on benefits, with payment freezes. Each measure creates a different opponent.
Ema
Let’s break that down. First, the public holidays. The unions would be furious, I assume. They would see it as an attack on workers' rights and hard-won benefits. The argument would be that employees are being asked to pay for government's financial mismanagement with their time off.
David
That's the primary perspective of the labor unions, yes. They, along with parties on the left, would frame this as sacrificing citizen well-being for the sake of abstract economic targets. They would argue for targeting corporations or the super-rich more heavily instead of touching public benefits.
Ema
But the proposal *does* include a new tax on high earners. Wouldn't that appease the left? Or is it not seen as enough? I can imagine the wealthy and business owners have their own perspective on that part of the plan. No one likes new taxes.
David
It's not seen as enough by the left, and it's seen as counterproductive by the right and business groups. Their perspective is that higher taxes on wealth and top earners will stifle investment, encourage tax evasion, and ultimately harm the economy's competitiveness, making the deficit problem even worse in the long run.
Ema
So you have this classic pincer movement. The left says, 'Tax the rich more!' and the right says, 'Don't tax the rich, it hurts the economy!' And the government is stuck in the middle, trying to do a little of both and pleasing absolutely no one. It’s a political tightrope walk.
David
A very wobbly tightrope. Then there's the freeze on pensions and welfare. This directly impacts retirees and the most vulnerable segments of the population. Groups representing these citizens would argue that their members are being asked to shoulder a disproportionate burden, especially when inflation is a concern.
Ema
And what about the average person? The one who isn't a union leader or a high-net-worth individual? I imagine the idea of losing holidays is just... deeply unpopular. It feels like a punishment, even if you understand the economic reasoning. People plan their lives around these breaks.
David
That's the cultural dimension of the conflict. For many French citizens, this isn't just an economic policy; it's an infringement on their way of life. The political opposition, particularly the populist right led by figures like Marine Le Pen, is capitalizing on this sentiment, painting the government as out of touch with the people.
Ema
So Bayrou's government is fighting a war on multiple fronts. They have the parliamentary battle, with the threat of a no-confidence vote. They have the unions and public sector workers protesting the cuts. And they have a general population that is culturally resistant to the most headline-grabbing proposal. It's a perfect storm.
David
Indeed. And the potential impacts are just as multifaceted as the conflict itself. Economically, the government has already had to adjust its outlook, lowering projected growth. This suggests that even they recognize these austerity measures could cool down the economy in the short term.
Ema
That seems a bit counterintuitive, doesn't it? You're trying to fix the finances, but the fix itself might slow down the economy. I suppose it's like a patient needing surgery. The surgery will save them, but the recovery period will be tough and they'll be weaker for a while.
David
That's a perfect way to put it. There’s a significant risk that austerity, without deep structural reforms, could simply lead to social unrest and a sharp drop in consumer confidence. If people are worried about their jobs, their benefits, and even their holidays, they tend to spend less, which hurts businesses.
Ema
And we've seen this play out in France before with the "yellow vest" protests. Those were triggered by a fuel tax increase, which seems minor compared to this. The social impact could be explosive, especially when you combine pension freezes with cuts to public services. It affects everyone.
David
Another key impact is on investors. Right now, investor sentiment is okay, but it's fragile. The political landscape is volatile. If the government fails to pass its budget or if the backlash against these measures spirals out of control, it could trigger a market sell-off, increasing the cost of borrowing for France.
Ema
So the very act of trying to appear fiscally responsible could backfire and make things more expensive if it causes political chaos. What about the specific taxes? For instance, the plan to increase taxes on health insurers. How does that impact the average person?
David
That’s a critical point. While it seems like a tax on corporations, the likely outcome is that these insurers will pass the cost on to their customers. This would mean higher health insurance premiums for individuals and families, which could disproportionately affect middle- and lower-income households.
Ema
So it's a hidden tax on the public. On one hand, the government is offering some relief by reverting electricity taxes to pre-crisis levels, but on the other hand, healthcare could get more expensive. It's giving with one hand and taking with the other. People will definitely feel that squeeze.
David
Looking to the future, the government's own medium-term plan is quite sobering. It indicates that public debt relative to GDP is expected to continue rising until 2027. The goal of getting the deficit below the EU's 3% threshold won't be met until 2029 at the earliest.
Ema
So even if all these painful measures are implemented, it's a very long road ahead. There's no quick fix. It's more like a decade-long marathon. That must be a hard message to sell to the public, who are feeling the pain right now.
David
It's incredibly difficult, especially for a minority government. The political future is highly uncertain. The government is, as some analysts have put it, "at the mercy of Le Pen." Any instability could play into the hands of the far-right ahead of the next presidential election. The budget crisis is fueling a wider political crisis.
Ema
It really feels like France is at a crossroads. The government might have to use a special constitutional power, Article 49.3, to force the budget through without a vote. But that's a "political bulldozer" that could trigger a confidence vote and bring the government down anyway. What a gamble!
David
It certainly is. France is attempting a fiscal tour de force, with 60 billion euros in savings and taxes on the table. But the government must balance market confidence, economic stability, and immense political pressure. The fight against debt will be long and arduous.
Ema
Ultimately, the proposal to cut holidays is a symbol of a much deeper struggle. It’s about France's economic future and its political identity. That's the end of today's discussion. Thank you for listening to Goose Pod. See you tomorrow.
