France's Mounting Debt and the Real Reason the Government Can't Stop Protests

Paris here. Today, on the 30th, we are going to talk about the turbulent protests in France. The demonstrations taking place in France are currently being broadcast live around the world. Some of the looting scenes were quite shocking. However, from my perspective, it does not look easy for the French government to resolve this issue.

1. 100 Trillion Won Just in Annual Interest: Will French Protests Be Resolved?
Let me explain through the numbers why it is so difficult for the French government to solve this problem. There are various indicators, but let us simply break it down into the French government's revenue and expenditures. Next year's revenue for the French government is projected at 375.7 billion euros, which translates to about 563.55 trillion won. Almost all of this comes from tax revenue. So, what about the outgoing money, the government expenditures? That comes to around 548.9 billion euros, or about 823.35 trillion won. The deficit already anticipated for next year is approaching 156.4 billion euros, or 235 trillion won. That shortfall must be entirely covered by issuing government bonds or other means, all of which adds to the national debt. France already has too much national debt. It amounts to around 5,400 trillion won, which is close to 120 percent of GDP. It is so massive that rumors of a fiscal crisis are circulating. On top of that, an additional debt of over 200 trillion won is already scheduled to pile up next year. The country is in a situation where it has to pay more than 100 trillion won just in annual interest. Heading down this path could lead to a sovereign default, so the French government is somehow trying to address it. There are only two ways: either increase revenue or cut expenditures. However, the tax burden ratio for both corporations and individuals in France is already at the very top tier, ranking among the top three in OECD countries. Unlike us, there are no corporations like Samsung Electronics or SK Hynix that suddenly earn massive amounts of money and fill the national tax coffers. Therefore, they are trying to cut expenditures. Although this is currently faltering a bit as the budget has not yet been finalized, they are aiming to cut about 37 trillion won from next year's projected budget. Well, that was a bit long, but this is the current financial standing of the French government.

2. No Money Coming In? What About Taxing the Rich?
However, the students and labor unions currently staging protests are demanding things that require almost entirely more money. Looking right away at the demands of the students who triggered the current protest wave, they are demanding an investment of 15 trillion won to improve school facilities and hire additional teachers to address shortages. When you factor in all the support for scholarships and living expenses, the figures keep growing by leaps and bounds. Last Monday, the government announced it would invest 1.5 trillion won annually to improve school facilities, but there is a significant gap compared to the scale demanded by the students.

[Shannon Omilan / Student Union Spokesperson: If they do not respond to our demands, we will take to the streets again, and we will resume the high school blockades.]

The government said it would cut 37 trillion won to reduce the national debt a little, but just accepting the students' demands alone would largely set back next year's target. On top of that, the demands made by general labor unions are all about hikes: civil servant wage increases, minimum wage increases, pension increases, social benefit increases, and so on and so forth—all increases. If you isolate just civil servant wages, the proportion of public servants in France is twice as large as in our country. That means public spending is correspondingly heavy. If they accept the unions' demand for a 10-percent hike as it is, an additional 35 trillion won will be required. Thus, while spending money is the only way to solve the problem, the French government, lacking funds to spend, finds it really difficult to resolve the issue. They say that rather than paying off or reducing this mountain of debt, they are set to inflate it even further at this rate. However, the students and workers staging these protests think completely differently. They argue that instead of cutting expenditures, the government should further increase revenue. They say that revenue can be sufficiently squeezed out of large corporations and the rich. There is something called the "Zucman tax," named after being designed by Professor Gabriel Zucman, which is a form of wealth tax. It proposes levying an additional 2-percent tax every year on the super-rich whose net assets exceed 100 million euros, or 150 billion won in our money. They claim this would raise an additional 200 trillion won annually. However, that 200 trillion won is somewhat inflated figure, and synthesizing research results suggests it would likely be around 40 trillion won. In any case, since it can at least meet the target the government claims it wants to cut, they are telling the government to collect more from there. Furthermore, pointing out that Macron cut corporate taxes to help businesses, they are telling the government to take it back this time. From the perspective of students and workers, they see plenty of areas where government revenue can be increased. However, those rich people are hardly going to accept that wealth tax as it is, and corporations, already facing a high tax burden, would surely want to avoid taking on any more.

3. Apple, Google, Meta, Amazon: New Cash Cows?
Looking just at the French automotive industry, more than 30 percent of jobs have disappeared since 2010, largely due to factories relocating overseas. Therefore, rather than tormenting domestic companies, a newly found source of funds to collect fresh taxes from—while creating fewer jobs and raking in massive piles of money in France—was the major U.S. global platform companies. Apple, Google, Meta, Amazon, and so on, have already been hit with fines amounting to tens or hundreds of billions of won. However, these are also tied up in lawsuits, so it remains uncertain how much revenue will ultimately be collected. Moreover, the U.S. government is hardly going to sit back and watch either. This means things will not go strictly according to the French government's wishes. To recap, France has more expenditures than revenue. Its debt is much larger. It is trying to reduce debt by cutting spending, but people are protesting, demanding that spending be increased. Instead, they say revenue should be increased by collecting taxes from the rich and corporations. These positions are locked in a tight standoff.

4. The Presidential Election Is Just Around the Corner—Can Politics Solve This?
This is precisely where politics is needed. Politics should drive social dialogue and compromise at times like this. Unfortunately, however, the French government lacks that political capacity. Macron's approval rating currently sits around the 15 percent level. When an approval rating is even at 30 percent, people wonder whether the end of a administration's term is slipping away; with a 15 percent approval rating, how much political clout can one possibly wield? On top of that, next year in April is the presidential election. The top one and two candidates in current opinion polls are from the far-right and far-left extremes. There is no way Macron's words will carry weight. Consequently, protest organizations feel they cannot trust the current government even if it promises to deliver this and that. They worry that a few months from now, when a new president and a new administration arrive, those leaders could simply say, "I know nothing about promises made back then." All of these circumstances surround the protests unfolding in France. Therefore, taking all these factors together into comprehensive consideration, I cannot escape the thought—just as I mentioned at the beginning—that France has little capacity to resolve this current chaos.

(Reported by Kwon Yeongin | Produced by Shin Heesuk | Video Reporting by Kim Sinae | Video Editing by Hong Jinyoung | Design by Yang Hyemin | Produced by SBS Digital News)
※ Please note: This article was translated by AI and may contain errors.