France has a recession-size deficit without a recession

France is running a budget deficit of about 5%, the kind of shortfall governments usually run only in a recession or a crisis. Right now, France is in neither.

That mismatch is the fiscal fault line beneath a recent outburst of street disorder that ranked among the harshest in years. Demonstrations tied to living costs and the quality of government services turned deadly, with one protester killed, many officers hurt, and a large number of people taken into custody. French President Emmanuel Macron, the country's head of state, appealed for calm. What started last month with complaints about schools widened into broader anger over unequal conditions, planned budget reductions, and household expenses.

A deficit means the state spends more than it collects, and in a downturn that gap often widens on its own because tax revenue falls while support payments rise. Without that excuse, France has, in the words of senior correspondent Lee Thomas, "very little room for maneuver in terms of finding extra cash." The gap will not close simply because a downturn passes. People want well funded public services and relief from living costs, yet officials have scant ability to come up with additional funds.

That is where pensions enter the picture. Pensions are monthly payments the state makes to retired people, and they are one of the largest and most predictable bills in the French budget. Thomas says "there is the beginning of an awakening" that services cannot stay at current levels without changes to when people retire and how pensions work.

For now, he says, that remains a minority view. Thomas says "France might slide deeper into crisis before" broader acceptance that "something may need to change."