new economy

　　

[European Times, July 17, Xia Ying, Translated] The Institut Montaigne in France released a comprehensive report on the development trends of France in 2040 on the 16th. This 283-page lengthy report reveals dozens of trends. The French magazine "Viewpoint" summarized the three most worrying and likely to attract social attention trends.

Population growth through immigration

Firstly, there is the population trend. France is at an important turning point. On one hand, the French population is aging, and the aging speed will accelerate significantly. Due to the birth of the baby boom generation and the extension of life expectancy, the proportion of people aged 65 and above will reach 22% in 2025 and may exceed 25% in 2040.

On the other hand, France is experiencing a birth rate crisis. In the early 2010s, the number of newborns recorded in France was approximately 820,000. In 2024, the number of newborns in France was only 663,000, returning to the level at the end of World War II.

Despite the aging population and low birth rate, by 2040, the French population will increase from the current 68.6 million to 70 million. The Institut Montaigne predicts that "short-term and medium-term population growth will mainly depend on net immigration". The think tank has referred to the data of the French National Institute of Statistics and Economic Studies (INSEE) and pointed out that "almost all recent population growth is based on immigration". By 2040, the proportion of immigrants in the French population will rise to 14%, while in 2023 this proportion was 10%. Moreover, the Institut Montaigne pointed out that these immigrants in France are structurally low-skilled immigrants.

Going into debt

The second trend is: public finances continue to spiral upward. The Institut Montaigne predicts: "If the policies remain unchanged, the debt will reach 150% of GDP (113.9% at the end of the first quarter of 2025), the burden of debt interest will exceed 200 billion euros per year (currently 50 billion euros), and it will surpass education and healthcare to become the largest budget item."

The report states that the current pay-as-you-go pension system "from a fiscal and economic perspective, seems structurally unsustainable", and suggests that the 2023 reform is far from enough to balance the system. "If the current trend continues, by 2040, due to the inability to reasonably arrange the labor force, the fiscal sustainability of France will tend to be tense." The Institut Montaigne added. Currently, the number of public sector employees in France is 5.7 million, equivalent to one public sector employee for every 12 residents.

In addition, the real interest rate may continue to rise (about 2%). This will question France's borrowing capacity and make it more complex, "possibly triggering an unprecedented crisis in modern history".

Responding to climate change

The last scenario considered is climate change. The latest emission reduction data shows that the annual average decline in 2025 is only -0.8%, rather than -5%. The Institut Montaigne prefers to adopt an intermediate solution, that is, a temperature increase of 1.5°C, and believes that France should pursue dual goals, that is, the economic structure of France should adapt to double the frequency of droughts, extreme rainfall, and major ecosystem damage; France should further promote the decarbonization process of energy production and industry.

The think tank will publish its "feasible and more operational solutions" in a few months, which will be the theme of the second report. The third report will be released during the 2027 presidential campaign and promises to analyze and quantify the plans of different candidates.