As France's presidential election looms, the country is approaching a breaking point.
For three decades, under both the right and the left, the country has pursued the same incompatible, if not contradictory, goals. With the sovereign-debt crisis pushing French banks - and thus the French economy - to the wall, something will have to give, and soon.
When the crunch comes - almost certainly in the year or two following the election - it will cause radical, wrenching change, perhaps even more far-reaching than Charles de Gaulle's coup d'état, which led to the establishment of the Fifth Republic in 1958.
Most French politicians and bureaucrats call such notions scaremongering. France's predicament might seem comparable with the UK, were it not for the French political class's beloved baby, the euro.
While the euro has not caused France's economic problems, its politicians' commitment to the single currency represents an insurmountable barrier to solving them.
The basic problem is that the country's super-generous welfare state (public spending amounts to about 57 per cent of GDP in 2010, compared with 51 per cent in the UK and 48 per cent in Germany) stifles the growth needed for the euro to remain viable.
The most serious structural flaws concern high payroll taxes and labour-market regulation, which make it difficult - or at least prohibitively expensive - for firms to reduce their workforce when business conditions worsen.
The Organisation for Economic Cooperation and Development (OECD) reports that in 2010, France's "tax wedge" (income taxes plus employee and employer social-security contributions minus cash transfers as a percentage of total labour costs) was at least 13 percentage points above the OECD average at every level of household income.
The result has been elevated unit labour costs relative to France's peer group (especially Germany) and stubbornly high unemployment. Unemployment has dipped below 8 per cent in only one year, 2008, since 1997. Under-utilised labour, and the combination of lacklustre growth and an ever-mounting welfare burden has resulted in chronic budget deficits. The last surplus was in 1974.
In the current election campaign everyone agrees deficit reduction is required, while differing on how to go about it. President Nicolas Sarkozy plans to boost growth by reducing the tax burden on employers, while hiking the rate of value-added tax. His main opponent, Socialist leader Francois Hollande, would impose higher taxes mainly on the wealthy and the financial sector, but also on big business.
With the only effective solutions - full-blown euro zone political union, or abandoning the euro - ruled out, muddling through is all that is left. Another name for this approach is "transfer union", which implies relentless economic austerity and declining living standards, because strong countries - first and foremost, Germany - are determined to limit their liability for bailing out deficit countries by making all transfers conditional on tough budget retrenchment.
Demand is being drained out of the euro-zone economies, with stronger external demand, stemming from the euro's depreciation against other major currencies, unable to offset the effect on growth.
The French government expects budget revenues to match all spending except debt service by 2014. But that forecast assumes continued growth, whereas France is slipping into recession. So the budget deficit will persist, and more retrenchment will be required.
Its response to the tension between preserving the European project (equated with the single currency) and avoiding a chronically depressed economy will be to put off the day of reckoning for as long as possible. But the day of reckoning will come, and France's ruling establishment will be judged harshly when it does.
* Project Syndicate
Brigitte Granville is a professor of international economics at Queen Mary College, University of London, and the author of the forthcoming book Remembering Inflation, Princeton University Press