What France can learn from the Greek crisis

France is going through one of the most critical periods of its modern economic history.  Spending cuts and tax increases, aimed at preventing economic collapse. France seeks to act before the country is forced to turn to the International Monetary Fund, a form of financing with particularly high interest rates that would be highly unfavorable. Greece, which had once sought help from the IMF, has now managed to repay those loans early, reducing its costs and regaining greater fiscal flexibility. France’s situation is further complicated by political instability: Many prime ministers have changed in just a few years, while the approval of the 2026 budget remains uncertain. Fitch  downgraded the country’s credit rating in September, while social tensions, union mobilizations, and protests from various professional groups make the upcoming period especially critical, writes Dafne Grigoriadi, MSc,  Ph.D cand. 

Lessons from the Greek crisis

The Greek experience teaches that delays in taking action can worsen an economic crisis. During its crisis, Greece reacted too late, seeking to avoid political costs, and thus slid into a deeper recession. Greeks nevertheless adapted quickly to harsh austerity and continuous reforms — something that was even highlighted by then-Chancellor Angela Merkel. Today, France has the opportunity to draw lessons from this experience by taking preventive measures before reaching a critical point. GDP rose by 0.3% in the second quarter of 2025, but this growth was driven largely by inventory build-up, while domestic demand remains almost stagnant. Unemployment remains at 7.5%, but the situation for young people is worrying: in the 15–24 age group it reaches 19%. The employment rate has climbed to a historic high of 69.6%, but this is largely due to greater participation from older workers — a sign that opportunities for younger generations are limited and that productivity gains are uncertain. The budget deficit is projected at 4.6% of GDP, while Moody’s estimates it could reach 4.9%. Public debt stands at 113% of GDP.

Three key differences between France and Greece

1.  France has little experience managing prolonged economic crises, which means social reactions may be sharper and more destabilizing for the government. Greece, by contrast, demonstrated remarkable resilience in adjusting to harsh economic conditions. Its citizens endured repeated reforms and austerity measures, harsh bailout memoranda, and even came close to leaving the European Union, experiencing capital controls in the process.

2. France is attempting to implement measures promptly, but political instability and uncertainty over the budget’s approval could hinder their application, threatening governmental stability. Greece, despite understanding the gravity of its situation, delayed critical actions in an effort to avoid political costs.

3.  France has a strong industrial base, giving it a better foundation to sustain production and exports at competitive levels. This means that even during times of crisis, the country has more room to support its economic activity. Greece, with its limited industrial base, had much lower competitiveness — something it still struggles to build despite the progress made in recent years.

What awaits the French economy in 2026

As austerity measures further weigh on domestic consumption, the government is trying to strengthen the competitiveness of the French economy. However, U.S. tariffs and the global shift toward protectionism are limiting the effectiveness of this strategy. A rise in self-employment also seems likely in France, just as it happened in Greece during the recession years and the COVID-19 pandemic. Confronted with labor market pressures, many workers at risk of losing their jobs turned to entrepreneurship. In Greece, this trend led to a significant increase in small businesses, as many sought ways to preserve their income. Finally, today’s economic world has tools and mechanisms that did not exist when Greece faced its crisis. The European Stability Mechanism, improved governance, and access to advanced financial instruments all mean that an economy can be saved more easily. Moreover, France is too large for Europe to allow it to collapse — such an outcome would be undesirable for all.

Dafne Grigoriadi, MSc,  Ph.D cand is an economic analyst contributing to Greek media outlets such as Atticatimes.gr, specializing in international economics with a particular focus on US economic policies.

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