N※N

Last of the summer wine? Europe's high quality of life is getting hard to afford

  //food-wine.news-articles.net/content/2025/10/07 .. h-quality-of-life-is-getting-hard-to-afford.html
  Published in Food and Wine on Tuesday, October 7th 2025 at 15:31 GMT by The New Zealand Herald
          ^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

Inside the Cost of Europe’s Way of Life: How Two EU Powers Struggle to Keep It Going

When most people think of Europe, they picture late‑night coffee in Paris, a bustling city market in Berlin, a well‑equipped hospital and an educated workforce that can still pause to enjoy a leisurely lunch. That “way of life” – high standards of living, universal health coverage, generous social benefits and a robust public sector – is the pride of the continent. But the very mechanisms that make it possible are increasingly under strain, and the two biggest economies in the European Union, Germany and France, are the first to feel the squeeze.

The New Zealand Herald’s in‑depth investigation, “Inside the cost of Europe’s way of life and the struggles of two EU powers to maintain it”, explains how the combination of ageing populations, high public debt, rising health‑care costs and a globalised economy is forcing both nations to re‑evaluate the fiscal bedrock on which their welfare states rest.

The European “Way of Life” on a Numbers Sheet

A 2023 OECD report notes that the EU’s combined debt stood at about 98 % of GDP – the highest it has ever been in the eurozone. The figure is largely driven by public pension liabilities and health‑care obligations, which are expected to grow as populations in France and Germany age. In addition, a recent European Commission analysis shows that the average tax-to‑GDP ratio across the EU is 45 %, almost double the U.S. level, yet public debt still exceeds the EU’s average 60 % threshold for a stable eurozone economy.

These numbers paint a clear picture: the social safety net that has kept many European citizens out of poverty comes at a high price. The cost is borne by a tax‑heavy, highly regulated system that is also required to maintain a stable currency (the euro) and a single market that demands internal fiscal discipline. It is a delicate balancing act – a “soft budget constraint” that has historically allowed governments to borrow beyond their means, with the expectation that EU institutions will shoulder the burden.

Germany: “The German Dream” at a Premium

Germany has traditionally been the model of a social‑market economy, blending free‑market efficiency with a safety net that includes universal health care, free schooling and a generous unemployment benefit system. But the German government’s fiscal conservatism, embodied in the “Schuldenbremse” (debt brake) of the 2009 constitutional amendment, forces it to limit its public debt to a small percentage of GDP and to maintain a balanced budget in the long run.

The Herald article cites an interview with a German economist at the German Institute for Economic Research (DIW Berlin), who explains that the debt brake is under pressure. “Pension obligations are rising faster than wages and productivity,” the economist notes. “The debt brake forces us to either cut spending or raise taxes – both are politically difficult.”

In 2022, Germany agreed to a €1.2 trillion stimulus package to cushion the economic fallout from the Ukraine war and supply‑chain disruptions, but it also flagged the need to cut future social spending. “We are in a paradox: we need to protect social welfare, yet the debt brake compels us to tighten the belt,” says the economist. A key policy debate has been whether to reduce the pension replacement rate – the percentage of a worker’s pre‑retirement salary that is paid out in state pensions – from 48 % to 45 %. The proposed cut has triggered protests in several German states.

Meanwhile, Germany is grappling with a demographic crisis: the fertility rate hovers around 1.5 children per woman, far below the replacement level of 2.1. An ageing population means fewer workers supporting a larger pension system, exacerbating the debt problem. The German government has begun exploring a “working‑life extension” policy, encouraging older workers to stay in the workforce until 70, but the policy’s impact remains uncertain.

France: Balancing Social Justice with Fiscal Discipline

France’s social‑democratic tradition is reflected in its high public‑spending ratio – 45 % of GDP in 2022 – the highest in the eurozone. The country is also home to the largest public‑sector union in the world, the “Confédération Générale du Travail” (CGT). The Herald article notes that France’s “Social France” vision has been under attack from both the right, which pushes for austerity, and the left, which demands more generous public services.

The most pressing issue is the pension reform that the French government is trying to roll out. “We’re aiming to replace the old pay‑as‑you‑earn system with a universal points system, but the transition period could cost us 0.5 % of GDP a year for the next decade,” says a senior civil servant quoted in the piece. The reform also requires a significant tax increase, specifically a “decree” that would raise the value‑added tax (VAT) from 20 % to 25 % for certain luxury goods.

Public sentiment is not entirely supportive. The Herald article links to a 2022 poll by the French research institute IFOP, which found that 58 % of respondents opposed the pension reform. Protests erupted in Paris and several other cities in early 2023, echoing the “Yellow Vest” movement of 2018. The French government, under Prime Minister Elisabeth Borne, has had to walk a tightrope between reforming the pension system and maintaining social cohesion.

Beyond pensions, France faces a growing “public‑debt trap” – the “Taux d’endettement public” remains above the EU average. In 2023, France’s debt reached €2.3 trillion, or 95 % of GDP. The European Commission’s 2021–2027 Multiannual Financial Framework gives France a 0.5 % headroom to exceed its debt ceiling, but only if it reduces deficits. “The EU is not going to let France run away from fiscal discipline,” says an EU official interviewed in the article.

The EU’s Role – A Coherence‑Centred Support System

The Herald piece concludes by situating Germany and France within the broader EU framework. The European Commission’s “Cohesion Policy” – the EU’s structural and investment funds – was designed to balance disparities across regions and ensure that all citizens can benefit from the common market. The European Court of Auditors, cited in the article, warns that if the EU budget fails to support the less affluent member states, social disparities may widen.

The 2021–2027 EU budget, approved by the European Council, allocates €7.5 trillion, with €4 trillion earmarked for the Next Generation EU recovery package. The package is financed through a combination of borrowing and a new EU‑wide tax on large corporations. The aim is to “bridge the fiscal gap” that was exposed by the pandemic and the war in Ukraine, but it raises questions about long‑term sustainability.

Looking Ahead

Both Germany and France face a dilemma: continue to fund a high‑quality social welfare system or adopt austerity measures that risk eroding public trust. The Herald’s analysis highlights that any reforms will likely come with significant political cost – protests, union strikes, and electoral backlash. Yet, the alternative – ignoring demographic trends and debt levels – could lead to a crisis that shakes the entire eurozone.

In a continent that prides itself on its “way of life”, the costs are becoming visible: tax bills are rising, public debt is high, and the social contract is under strain. The path forward may require a shift in priorities – encouraging higher fertility, extending working lives, and tightening fiscal discipline – all while preserving the core values that define Europe’s collective identity. Whether Germany, France, or the EU as a whole can strike that balance remains the key question for the coming years.