Europe’s living standards under pressure
Across Europe, the cost of maintaining the so-called “European way of life” — offering public healthcare, affordable education, and universal pensions — is becoming unsustainable. As European nations pour billions into defense budgets, their national debts continue to rise, prompting concerns about long-term fiscal stability.
In France, public debt is soaring, credit ratings are slipping, wages have stagnated, and political turmoil has deepened. Prime ministers fall in rapid succession, leaving the country struggling to govern.
Germany faces similar stagnation, enduring two consecutive years of economic decline. Meanwhile, Greece — much smaller than Europe’s economic giants — continues to hold the highest debt-to-GDP ratio in the European Union.
This financial uncertainty raises a profound question for Europeans: Will younger generations live worse than those before them?
Debt levels across Europe in 2025
Greece’s debt remains the highest in the EU, although it has declined steadily from 180% of GDP in 2022 to 153% in 2025.
Italy follows with a debt-to-GDP ratio of 138%, yet has made progress in reducing its deficit from 7.2% in 2023 to 3.4% in 2024.
By contrast, France’s debt is climbing — now at 114% of GDP. To address the crisis, the government has raised the retirement age and even proposed eliminating two public holidays, sparking widespread anger.
Germany’s debt ratio stands at a comparatively low 62%, well below the EU average of 82%. But its massive defense spending — part of a broader military modernization — is pushing fiscal limits.
Political and economic turmoil in France and Germany
France is once again in crisis after Prime Minister Sébastien Lecornu resigned just four weeks into office. His predecessor, François Bayrou, was ousted after proposing deep budget cuts, including the removal of two national holidays.
In Germany, the situation is equally tense. The economy remains flat, infrastructure is crumbling, and job losses are mounting. Rising pension and healthcare costs, coupled with an aging population and resistance to immigration, threaten to erode the tax base.
Public frustration is growing — particularly in France, where many see widening inequality and accuse the wealthy of paying disproportionately little in taxes.
For France and Germany, long considered the twin pillars of the European Union, it’s unclear whether they can still sustain their roles as models of social and economic fairness.
High spending, low growth
“The EU is no stranger to economic or political problems,” wrote The Washington Post, “but until recently, those problems were at the periphery — in countries like Greece, Italy, or Spain.” France and Germany, once seen as anchors of stability, now face their own crises.
Italy’s credit rating was upgraded last month, while France suffered a downgrade by Fitch, which cited “high and rising debt levels” and “political fragmentation.”
Meanwhile, EU defense and space spending is set to soar to €131 billion between 2028 and 2034 — five times higher than the previous seven-year period.
The consequences are stark: France now borrows at slightly higher interest rates than Greece — once unthinkable. Spain, which has kept spending relatively low, is faring better, with unemployment halved. France, on the other hand, has had four prime ministers in just 15 months, while support for nationalist and anti-immigration parties such as France’s National Rally and Germany’s Alternative for Germany has surged.
Global pressures add to Europe’s strain
Europe’s internal struggles come at a time of external threats. The continent is squeezed between an aggressive Russia and an unpredictable United States, whose shifting foreign policy has shaken NATO confidence.
These pressures are driving EU governments to spend more on defense — often at the cost of welfare programs or through higher taxes, which risk stifling growth.
At the same time, Europe faces mounting economic competition from China, which challenges its industries in sectors such as electric vehicles and nuclear energy.
Calls for spending cuts and reform
The French budget that brought down Bayrou proposed €44 billion in cuts, including pension freezes and the abolition of two public holidays. Public outrage was swift, leading to his ousting.
His successor, Lecornu, rejected a proposed “wealth tax” but urged lawmakers to reach a deal to curb the budget deficit — a deal that never came. His sudden resignation on Monday underscored the depth of France’s political paralysis.
During protests in September, young demonstrators chanted, “Lecornu, you’re next” — a grim prediction that came true within weeks.
Former Finance Minister Michel Sapin criticized President Macron’s government for overspending to cushion the public from the pandemic and the energy crisis following Russia’s invasion of Ukraine. Yet he argued that France’s fiscal challenges remain “manageable.”
“I believe we still have the means to find solutions,” Sapin said, “and that Europe has the resources to prevent things from going in the wrong direction.”
Germany confronts harsh choices
In Germany, Chancellor Friedrich Merz has called for a politically risky overhaul of the welfare state. “We simply can no longer afford the system we have today,” Merz said during an August speech at his Christian Democratic Union party congress in Bonn. “This will mean painful decisions. It will mean cuts.”
Perhaps, then, Merz has already answered the central question haunting Europe: Yes — millennials and the generations that follow may well live worse than their parents.
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