France's pension costs fuel debt strain and student protests, Krugman says
Nobel laureate Paul Krugman linked France's bond market turmoil and student protests to generous pension spending that forces cuts elsewhere, especially education. France's effective retirement age is among the lowest in Western Europe, and efforts to raise it have stalled. Krugman said the fiscal pressure amounts to large subsidies for older French at the expense of younger generations.
Krugman argues France's pension system is unusually costly, with workers able to claim full benefits at 62 in 2023 and actually leaving work at 60.4 on average—the lowest in Western Europe. He connects that spending to underfunded schools, where protests have erupted over teacher shortages, poor buildings, and heat.
Macron's attempt to lift the retirement age to 64 has stalled amid opposition, while likely presidential contender Marine Le Pen wants to lower it back to 62 or even 60. French 10-year yields recently hit their highest since 2002, and the spread over German debt reached its widest since 2011.
If France's pension costs keep pressuring budgets, younger people may face continued underfunding of schools and public services, while older retirees could see benefits protected in the short term. Bond investors may demand higher yields, raising borrowing costs and potentially forcing harder choices. Students and teachers could remain central to protests, and any rollback or increase in retirement age may intensify generational political tensions.