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We all tend to have short memories and, with the velocity of global news, we tend to react to current stories without looking back. When it comes to the situation in France, we should probably look back at least two decades. But let us settle for quickly looking back at last year to try to understand what is happening today.

On Tuesday, a new prime minister was nominated by President Emmanuel Macron, just as the country braced for Wednesday’s day of disruptions organized by the “Bloquons Tout” (Block Everything) movement.

Following the heavy defeat of his party in last year’s European elections and the rise of the National Rally, Macron announced the dissolution of the National Assembly. Snap legislative elections were held shortly after, but they resulted in a parliament without a clear majority. The largest single-party bloc was the National Rally. Then politics went into action and the New Popular Front — uniting France Unbowed, the Socialist Party, the Greens and the French Communist Party — came out on top with approximately 182 seats. Macron proceeded to ally with the center and the left in a fragmented assembly that complicated any attempts at governance.

After lengthy negotiations, Michel Barnier, a former European Commissioner and prominent figure in the center-right Republicans party, was appointed prime minister last September, tasked with forming a unity government. His government was a stretched alliance of centrists and the left, with the greatest pressure coming from the extreme left. In short, while the votes indicated a country leaning toward conservative parties, politics gave it a center-left government.

While the votes indicated a country leaning toward conservative parties, politics gave it a center-left government

Khaled Abou Zahr

It was hence not a surprise that it did not last long and, in early 2025, Francois Bayrou succeeded Barnier as prime minister, backed by the idea of yet another centrist compromise. Bayrou quickly raised the alarm about the scale of public debt while preparing the 2026 budget. He presented a plan with heavy budget cuts and targeted revenue increases. While trying to get a clear mandate, he chose to put his government to a confidence vote, but it was rejected by the National Assembly on Monday, leading to its fall.

All this has happened while popular rage has grown. Block Everything, which was launched in the spring within sovereigntist circles, was quickly diverted by the radical left and trade unions. It grew into a social mobilization movement in parallel to the political deadlock in the assembly. It is similar to the “Yellow Vests” movement. This week, as protests swarmed France, Sebastien Lecornu, the former defense minister and a close ally of Macron, was nominated as PM and started consultations to form a new government.

Bayrou was right to raise the alarm, as the situation in France might not only bring the country into a troubled situation but, considering the weight France has in the EU, it could also drag Europe into financial chaos.

Paris faces a highly fragile economic situation, with public debt reaching some €3.3 trillion ($3.8 trillion), or 114 percent of gross domestic product, with debt interest payments projected to exceed €100 billion by 2029. The budget deficit is estimated at 5.8 percent of GDP, well above the 3 percent threshold set by the EU. This is reflected in the financial markets, as the country now borrows at a higher rate than that of Greece and close to Italy’s. This distrust among investors highlights the risk that France might soon be unable to make decisions due to the political instability. This, in turn, could spread to the entire eurozone.

The current situation in France is reminiscent, in several ways, of the Greek crisis of 2010 to 2012 and this is what is being reflected in the financial markets. If this trend continues, France could face a scenario whereby refinancing its debt becomes far more costly, limiting its ability to fund public services and investments. The country might be forced to adopt austerity measures far more severe than those proposed in Bayrou’s 2026 budget. This would feed into the current social unrest. As France is the second-largest economy in the eurozone, this situation would quickly have an effect on Europe and could spread to other sovereign markets.

France might soon be unable to make decisions due to the political instability. This could spread to the entire eurozone

Khaled Abou Zahr

There is the real risk of a full-blown crisis in France, including a run on the banks, which would not only weaken the euro but also present a real systemic risk. European banks exposed to French debt or financial institutions could face significant losses. This could require the intervention of the European Central Bank to stabilize the banking system and prevent a domino effect across the eurozone. This could also force EU institutions to consider support mechanisms similar to those implemented for Greece.

This is why it is essential to present a clear and achievable plan for a budgetary cleanup in order to restore trust before it is too late. France, which is already in Europe’s top three countries in terms of debt to GDP, has no choice but to reduce public spending over both the long term and the short term. But cuts without a plan for growth would be an even bigger disaster; hence, preserving the investments that are essential for growth and competitiveness, as well as defense, should remain untouched.

However, our little flashback indicates that there is little chance of this happening and that, with the political machinations taking place, there is no room for real strategy. Things could even get worse, as voices begin to call for a Sixth Republic. Without an absolute majority, political compromises might be able to patch together a 2026 budget and delay the crisis, but they will not provide a true solution.

While this crisis seems domestic, it symbolizes something deeper in Europe: the end of an epoch and the need for reinvention to face today’s global challenges. France remains a country of contradictions as, against the backdrop of this political debacle, the startup Mistral AI has emerged as an exceptional contender for the artificial intelligence race and this week secured a valuation of €14 billion in a new funding round. The pool of talent, capacity and sovereignty in France is unbelievable and exceptional, just as its political actors are incompetent and self-centered. This news shows how innovation thrives despite, or perhaps because of, the chaos in Paris. Rebooting innovation, like Charles de Gaulle did, is now an urgent matter. True leadership is needed for both France and Europe.

• Khaled Abou Zahr is the founder of SpaceQuest Ventures, a space-focused investment platform. He is CEO of EurabiaMedia and editor of Al-Watan Al-Arabi.