France is in the “merde”, in case you hadn’t already noticed. The country is on fire thanks to widespread civil unrest that has led to riots, looting and left historic buildings smouldering.

But while the French are revolting and setting things alight, a far more dangerous firestorm is raging through European financial markets. Emmanuel Macron’s bloated state is facing a catastrophic fiscal reckoning that threatens to plunge the Eurozone into an unprecedented existential crisis. The crucible of this is France’s out-of-control welfare state and an embarrassing lack of economic growth.

France spends an eye-watering sum on state services, with crippling pension commitments eating up immense public resources – such as £20billion out of a £73billion annual education budget spent purely on pensions.

To cover its ballooning deficit and refinance existing obligations, the French government faces raising a staggering £585billion a year.

Bond markets have recoiled in horror. French 10-year government bond yields have surged toward 5%, widening the yield gap against German bonds to levels not seen since the height of the sovereign debt crisis.

Investors simply do not want French debt without a steep risk premium. As the Eurozone’s second-largest economy, France’s tailspin is sending shockwaves across the single-currency bloc.

European banks hold trillions in sovereign debt, reviving fears of a return to a financial “doom loop”. Worse still, France may soon be forced to beg Brussels for a colossal bailout.

But while smaller economies could be rescued during previous crises, France’s sheer scale means it is perilously close to being too big to save.

If Paris demands an emergency lifeline, the EU will face a stark choice. Either Brussels agrees to underwrite French debts – forcing a full fiscal union that turns European taxpayers into perpetual guarantors – or it refuses, leaving its economy effectively kaput.

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