"We'll have to compensate for the deficit one way or another": is Social Security really heading for disaster?

By Hugo Bachelet

Published on May 27, 2025 at 7:08 p.m.

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Analysis: The Court of Auditors published its traditional report on Social Security on Monday. With a deficit of €22.1 billion predicted for 2025 and a funding system in dire straits, the results are alarming. Ultimately, the reimbursement of benefits could be threatened.

The alarm bells have sounded. Accustomed to rigor, the Court of Auditors' annual report on Social Security, released on Monday, May 26, warns about the health of the Social Security's finances . It is particularly concerned about an " increasingly serious risk of a liquidity crisis " by 2027. The initial deficit of €15.3 billion for 2025 will ultimately be higher than expected and is expected to reach €22.1 billion.

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The first president of the Court of Auditors, Pierre Moscovici, expressed particular concern about debt sustainability. Social Security could eventually face a liquidity crisis. "We lost control of our public finances in 2023 and 2024," he worried. The health insurance branch and its expenditures alone account for 90% of the deficit. In concrete terms, Social Security will have to tighten its belt to get back on track, and the upcoming measures could weigh on taxpayers' standard of living.

An alarming situation

While warning about the "hole" in the Social Security system is a leitmotif of the institution on Rue Cambon, the gap between the State's initial forecasts and future prospects raises concerns. " There are no cyclical and temporary explanations, as was the case with Covid, but a structural, lasting deficit that is reaching beyond €20 billion annually ," Mathieu Plane, economist and deputy director of the French Economic Observatory (OFCE), told Le Nouvel Obs.

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The Social Security financing system is particularly to blame. It is usually backed by the Social Debt Repayment Fund (Cades), which borrows in the medium and long term. However, this organization has reached its debt ceiling and can no longer absorb additional costs. " The problem is two-way: expenses are too high and tax revenues too low. There is therefore an imbalance ," explains Mathieu Plane. The Central Agency for Social Security Organizations (ACOSS) is therefore taking over and borrowing in the short term. According to the high court's report , this situation is untenable and jeopardizes the viability of the Social Security system. " We can't say that this is temporary and that the situation will improve: we will have to make savings and find new sources of revenue ," warns the economist.

The gloomy outlook for a " liquidity crisis " outlined in the report remains unlikely. " It's a worst-case scenario, but the situation is nonetheless tense ," says Mathieu Plane. The Social Security deficit is part of an overall situation in which public debt continues to grow. However, we must aim for a return to balance: "The structural Social Security system has no reason to be in deficit ," explains the economist . "It's not based on investment; it's simply about revenue and benefits. We'll have to compensate for the deficit one way or another."

To rectify this situation, the Court of Auditors recommends, in particular, better monitoring of retirement pensions paid abroad or regulation of temporary work in certain sectors, particularly for nurses, physiotherapists and nursing assistants.

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