By Kenneth M. Stokes* – Article sent to Other News by the author
Europe has developed powerful institutions for preserving monetary integration, yet the measures undertaken to defend those institutions may weaken the economic and political capacities needed to reform them. Rising public debt has revived demands for fiscal discipline.
France’s mounting public debt has revived demands for fiscal discipline. Governments are urged to reduce expenditure, reassure creditors and demonstrate that they can manage public finances responsibly. These obligations cannot be dismissed. Yet much of the discussion assumes that France’s difficulties can be resolved principally in Paris, although its economic circumstances are shaped by European monetary arrangements that the French government cannot independently change.
The figures establish the seriousness of the predicament. According to France’s National Institute of Statistics and Economic Studies (INSEE), public debt rose from 98.2 per cent of GDP at the end of 2019 to 112.6 per cent in 2024 and 115.7 per cent in 2025. By June 2026, it had reached €3,595.5 billion, or 119.0 per cent of GDP. The annual deficit narrowed from 5.8 per cent of GDP in 2024 to 5.1 per cent in 2025, yet debt continued to rise.
In a report of 6 October 2026, the French Treasury projected public debt of 119.3 per cent of GDP at the end of 2026 and 121.7 per cent in 2027. These forecasts are not inevitable outcomes. They indicate, however, why the country’s fiscal predicament cannot be treated as a temporary failure of political resolve.
The wider problem concerns the organisation of European economic authority. Monetary policy is common to euro-area states, while employment, taxation, most public investment and social provision remain substantially national responsibilities. Participating governments must therefore address differing economic circumstances under commitments that none can independently revise. The difficulty is not simply that fiscal authority remains dispersed. It is that European governments possess more effective means of enforcing established arrangements than of jointly correcting their harmful consequences.
This imbalance presents a recursive danger. Measures adopted to preserve fiscal and monetary arrangements may weaken investment, productive capacity or public confidence. The resulting pressures may strengthen institutional commitment to those arrangements even as their consequences diminish the productive capacities and political cooperation needed for their revision.
Economist Yanis Varoufakis has emphasised the consequences of monetary integration for countries with differing productive structures. France and Germany cannot adjust their relative competitiveness through exchange-rate movements within the euro area. Adjustment must instead involve investment, productivity, prices, employment and public expenditure. The consequences vary across economies and social groups, and common institutions do not provide equivalent means of managing them.
This explanation requires qualification. France’s debt cannot be attributed solely to the euro. National fiscal choices, industrial development, private investment and demographic conditions also matter. Nor does economic diversity make monetary union inherently unworkable. Its viability depends partly upon whether participating states can adjust to differences without repeatedly imposing costs that undermine their economic and political capacities. The euro does not explain France’s debt total; it shapes the available means of responding to it. This distinction matters because the case for institutional correction does not require attributing every fiscal difficulty to European integration.
The European Central Bank has substantial authority to maintain monetary stability, while national governments retain primary fiscal responsibility under common rules. The Stability and Growth Pact’s reference values of 3 per cent of GDP for deficits and 60 per cent for debt remain part of the framework revised in 2024. That reform allows differentiated national fiscal plans and certain investment commitments.
Yet the euro area still lacks a durable common fiscal capacity capable of providing substantial stabilisation when its members experience divergent economic pressures. Existing EU investment and recovery instruments are often earmarked or temporary, and do not respond automatically to every national economic shock. The ECB can address monetary and financial disturbances, but decisions on fiscal transfers and public investment require political authorisation.
Deficit and debt ratios are important measures of fiscal exposure, but they cannot establish whether the policies adopted to improve them preserve the productive and institutional capacities needed for future solvency. Where compliance becomes the principal test of fiscal responsibility, these wider consequences may receive insufficient weight in economic decisions.
Expenditure restraint may protect creditworthiness, but its effects depend upon what is cut and under what conditions. Where restraint suppresses demand, delays productive investment or weakens essential public capacities, growth and future revenues may suffer. Deteriorating debt ratios can then prompt further consolidation. A policy adopted to restore fiscal viability may, in some circumstances, weaken the conditions required to achieve it.
France’s rising debt-service burden sharpens the problem. The Treasury projects public-sector interest payments increasing from 2.2 per cent of GDP in 2025 to 3.7 per cent by 2030 as debt is refinanced at higher rates. Debt-service obligations are legally enforceable, while investment in infrastructure, education and public capacities needed to sustain future revenue can more readily be deferred. Fiscal prudence must preserve the means of repayment as well as honour the obligation to repay.
There is a parallel political difficulty. French governments answer to voters for employment, public services and economic security, but cannot independently revise the common arrangements shaping those outcomes. National elections therefore provide an incomplete means of changing consequential economic commitments. European representation does not fully remedy this division of authority. When governments can enforce rules more readily than they can agree to revise them, public confidence may decline, and the political cooperation necessary for correction becomes harder to secure. This loss of confidence may strengthen appeals for restored national control, although the common commitments at issue cannot be revised by France alone.
Monetary stability was never the whole purpose of European integration. The common currency was intended to serve prosperity and cooperation among societies once divided by destructive rivalries. Its preservation remains legitimate, but policies defended in its name must remain open to judgement when their effects compromise those wider purposes. Institutions can fulfil their formal mandates while progressively losing the capacity to serve the people for whom they were established.
The alternative is not confined to complete European federation or dissolution of the euro. Common investment, fiscal stabilisation, greater national discretion and, where warranted, negotiated monetary reorganisation warrant examination. None constitutes a remedy in advance. Each must be judged by its costs, distribution of responsibilities and capacity to accommodate later revision.
European reform should strengthen the capacity for fiscal stabilisation and productive investment while enabling participating governments and institutions to recognise and correct harmful consequences of their common economic commitments. Such capacity requires durable financing and democratic authorisation, although its institutional form should remain open to negotiation and revision. Greater common fiscal resources would be of limited value if the institutions administering them became increasingly insulated from reconsideration.
National governments, the European Parliament, national parliaments and independent public institutions provide an existing institutional basis for developing the capacities needed for effective collective correction. Their ability to scrutinise common commitments could be strengthened without establishing another supervisory authority. Reports of centralised decision-making within the European Commission, together with the General Court’s 2025 annulment of its refusal to grant access to requested records, illustrate the need for scrutiny independent of the institution concerned.[1] The Commission should retain its lawful responsibilities and expertise, but should not control examination of the consequences of policies it helps administer. National and European parliamentary inquiries, independent fiscal assessments and public scrutiny should remain capable of proceeding through their respective institutions.
The Interparliamentary Conference on Stability, Economic Coordination and Governance in the EU offers a possible starting point. Its national and European parliamentary participants could examine a contested fiscal adjustment, comparing projected savings with likely effects on investment, employment and future revenues. They could seek explanations from the responsible institutions and revisit their findings at a subsequent meeting, revising their assessment where warranted. Regional authorities, workers, businesses and affected communities should retain recognised means of challenging consequential decisions, including the assumptions through which their effects are judged. Such contributions may disclose difficulties before they become apparent in established economic indicators. Independent scrutiny should therefore admit competing interpretations while distinguishing credible warnings from unsupported claims. Its purpose would be to make differing sources of knowledge mutually consequential, without requiring their reconciliation under a single authority.
Where scrutiny disclosed substantial evidence of harmful consequences, agreed procedures should require the responsible institutions to examine the findings publicly and explain their proposed action or reasons for declining to act. National governments and parliaments, the European Parliament, the Commission and the Council would act through their respective legal powers. Corrective measures could include revised fiscal adjustment paths where permitted, targeted investment or stabilisation support. Their financing and authorisation would require agreement among the relevant participants, distinguishing euro-area obligations from those involving the wider Union. The European Central Bank would retain its independent monetary mandate. Neither independent expertise nor parliamentary scrutiny could prescribe the outcome, but their findings should be capable of prompting reconsideration and further action.
Correction must also extend to the purposes and consequences of the reforms themselves. Measures that improve fiscal performance may impose unacceptable social or environmental costs, while arrangements intended to strengthen cooperation may diminish national discretion or exclude affected populations. Continuing assessment should preserve opportunities to question these outcomes and revise the commitments that produced them. No participating institution, including those undertaking scrutiny, can be presumed immune from the difficulties it seeks to identify in others.
Agreement would remain difficult. Fiscal cooperation distributes financial obligations unevenly; common investment provokes disputes about priorities; national discretion must be reconciled with shared commitments. But these conflicts do not justify treating inherited arrangements as beyond reconsideration. They require institutions able to negotiate disagreement without extinguishing the independent capacities on which cooperation depends.
Underinvestment can erode productive capacity, retrenchment can weaken public institutions, and political distrust can make agreement harder to reach. European governments may then retain the formal authority to revise common commitments after their practical capacity to do so has substantially diminished. Periods of relative stability therefore offer an opportunity to preserve the resources and cooperation on which future correction depends.
France cannot make these changes alone, although its government remains responsible for decisions within its authority. European integration was intended to advance prosperity, democratic cooperation and the reduction of antagonism among participating societies. Monetary stability serves those purposes; it cannot substitute for them.
The test of European integration is whether its institutions can preserve cooperation while remaining capable of correcting the consequences of their own decisions.
[1]Suzanne Lynch and Nicholas Vinocur, “Ursula von der Leyen Is Losing Her Team,” POLITICO, 27 July 2023, reproduced in Other News, https://www.other-news.info/ursula-von-der-leyen-is-losing-her-team/; General Court (Grand Chamber), *Matina Stevi and The New York Times Company v European Commission*, Judgment of 14 May 2025, Case T-36/23, ECLI:EU:T:2025:483, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:62023TJ0036.
*President of the World Sustainability Forum. This editorial draws on the author’s project, The Ecology of Power, particularly its analysis of how efforts to preserve institutions may undermine the capacities necessary for their correction, and how differentiated political authorities can sustain cooperation through mutual scrutiny and revision.