PARIS — After a summer of extreme, climate change-driven heat, France must spend billions of euros to help the country rebuild and ensure it is better prepared the next time the mercury rises and records fall.

Money, however, is hard to come by.

France is sitting on more than €3.5 trillion in public debt, which is becoming increasingly expensive to finance and is well above the European Union’s limit. Paris has already committed to billions in increased defense spending over the next several years, ruled out significant tax hikes and promised to slash its budget deficit, which came in at 5.1 percent of gross domestic product last year, to 3 percent by 2029 to comply with EU rules.

Crafting a budget for next year that can achieve those goals while also allocating enough resources to prepare France for the next summer of extreme heat that cooks livestock alive, plunges the country into drought and fuels wildfires that drive thousands from their homes is like trying to square the circle. But getting a hung parliament to agree on spending in the run-up to a presidential election will make the exercise even more difficult.

“We need billions — let’s be clear-eyed about this,” said Sophie Panonacle, a centrist, pro-government lawmaker who represents the fire-hit southwestern Bassin d’Arcachon area. “We really must urgently consider this issue of adaptation. We are making no progress at all on this matter.”

Budget crunch, meet climate crisis

Visiting the southwestern town of La Porge on Monday, where hundreds of people saw their homes go up in flames last month, Prime Minister Sébastien Lecornu listed a series of measures crafted to help residents rebuild their homes and keep businesses hit hardest by the fires afloat.

These included a total of €12 million in direct assistance for the two local administrations most affected by the fire, Gironde and the Landes, as well as rebates on property taxes and social security contributions in those areas and more funding to replant forests. Later that evening, President Emmanuel Macron announced that the proposals would also apply to the southern region of Var.

Lecornu said the measures would add up to €100 million, though it’s unclear whether that figure covers costs only in the towns he visited or also in the Var region.

Ecological Transition Minister Monique Barbut said last week that the total immediate cost of the summer’s heat, including lost homes and incomes, could reach €10 to €15 billion — the equivalent of 0.5 percent of GDP — though she cautioned that those figures were a rough estimate. When asked by French daily Libération about Barbut’s estimate, Economy Minister Roland Lescure later said it was too early to quantify the damage.

Whatever the final total comes to, there’s little doubt it will be difficult to pay given the need to get the country’s finances in order.

In a report commissioned by the French finance ministry, top economists last month said France must cut spending and raise taxes by €125 billion by 2032 to prevent its budget deficit from reaching 7 percent of GDP by the end of the decade.

A comprehensive strategy

Critics of the government say it has failed to provide specific details on how it intends to fund immediate and future budget needs for adaptation and climate change mitigation, frustrating lawmakers.

“We need to respond to climate-related events, but first we need a comprehensive strategic review regarding resources already allocated and promises made around fighting wildfires,” said Jean-François Husson, the Senate’s budget watchdog. “We’re addicted to making announcements which aren’t followed by results, and meanwhile the debt levels are spiraling.”

Husson said that he intends to summon government officials to provide clearer figures in the coming days.

“They cannot treat Parliament the way they do, specifically regarding budgetary matters,” Husson said.

That criticism cuts across party lines. Eric Coquerel, the left-wing head of the finance committee in the French National Assembly, has asked the government to urgently present a revised version of this year’s budget to parliament to address the need for more funds.

With state coffers so depleted, Barbut floated in an interview with Libération tapping private savings to help cover costs, as the French rank fairly high among EU countries in terms of savings but, like the rest of Europe, don’t invest much in stocks and bonds.

Panonacle, the centrist lawmaker, is one of 50 MPs pushing a proposal to use €50 billion in private savings to fund costly adaptation policies, including making buildings more resilient to extreme heat, installing more air conditioning in public facilities, and reinforcing flood defenses.

However, that money is already used to finance public projects, particularly social housing, and the economy ministry last year shot down a similar proposal to use money from a popular savings account to bolster defense spending.

Some ministries are focusing on efficiency gains. Interior Minister Laurent Nuñez will present a bill in September meant to modernize France’s civil security providers for example by rethinking its emergency dispatch system so firefighters are no longer deployed for every minor emergency.

“It’s not just about the amounts allocated, but also about how you use resources,” said an interior ministry official, who was granted anonymity to speak candidly.

Once summer ends, the clock starts ticking. Lecornu’s government is expected to present lawmakers with a draft budget to be debated by October. The goal is to get the process done by the end of the year — a goal lawmakers failed to meet in 2024 and 2025.

VILARDEVÓS, Spain — Nestled in the scrubby hills of northern Spain, this small village feels like a place that has fallen out of time. In reality, it offers a glimpse of the demographic future.

When Yaiza Ferreiro Collazos begins her English lesson on a June morning, eight children are sitting in front of her. The oldest are in sixth grade, the final year of primary school; the youngest are in fourth.

Teaching them together is not always easy, the 30-year-old says. But there are too few pupils to separate them.

The Rodolfo Núñez Rodríguez nursery and primary school opened in 1974 and was built for 700 children from Vilardevós and the surrounding villages. Today, it has 31 pupils, from preschool through sixth grade.

Apart from the school bell, the building is eerily quiet, even during breaks. The silence extends into the village. Most people encountered in its lanes are old. Many houses are abandoned, their façades marked with signs reading Se vende — for sale.

Vilardevós is an extreme case, but not an isolated one. Across Europe, birth rates are falling, populations are aging and fewer young people are entering the workforce.

Modern welfare states rest on an intergenerational bargain. Today’s workers finance pensions and health care for older people, trusting that others will eventually do the same for them.

Low fertility is straining that bargain. Fewer young people are entering the workforce just as large generations approach retirement. Pension reform has already become one of Europe’s most politically difficult issues, and the viability of the Social Security system is a perennial concern in the United States. Those political pressures will continue to intensify as the population ages.

That has forced governments to confront an increasingly urgent question: Can they persuade people to have more children — and, if not, can immigration prevent the demographic arithmetic from breaking down?

Why birth rates are falling

For a population to remain stable over time without immigration, women must have an average of about 2.1 children. According to the latest Eurostat data, the European Union’s fertility rate — the average number of children a woman is expected to have over her lifetime — fell to 1.34 in 2024. In Spain, the lowest among the continent’s large countries, it was 1.1 and still declining.

The United States is only slightly less exposed. Its fertility rate, long higher than Europe’s, has also dropped well below replacement level. According to the Centers for Disease Control and Prevention, it fell to 1.6 in 2024.

For a long time, falling birth rates were not treated as an urgent problem. After all, their effects take decades to emerge: A decline in births does not become a shortage of workers until roughly a generation later. By the time schools empty and pension systems come under strain, the demographic trajectory is set.

Europe and the United States also appeared less exposed than parts of East Asia. Taiwan, Hong Kong and Singapore are already grappling with fertility rates below one child per woman.

Then there is the harder question: Why is this happening?

There are many competing explanations. Karen Benjamin Guzzo, a sociologist at the University of North Carolina, has argued that part of the fall in the U.S. reflects a public-health success: Americans have become better able to avoid teenage pregnancies and unintended births. But beyond that, the story is similar on both sides of the Atlantic.

Housing is too expensive. Women are prioritizing their careers. Men are taking longer to mature. Religion has lost influence. Smartphones and social media are weakening real-world relationships. Fear of climate change makes having children feel useless and cruel.

Each hypothesis has its adherents, along with its own books, podcasts and preferred evidence. None, on its own, fully explains the decline.

Berkay Ozcan, professor of social and public policy at the London School of Economics, has little patience for attempts to identify a single culprit. The decline, says the 47-year-old father of two, is driven by a combination of causes. Insecure labor markets and high housing costs play a role, as do changing values, longer periods of education and rising expectations of parenthood.

But all these factors have a common effect: postponement. Surveys show that young people still want, on average, about two children. But many delay parenthood until they feel professionally, financially and emotionally ready, Ozcan says — and often wait longer than they intended.

Eva Beaujouan agrees, and she speaks from more than just professional experience. When the University of Vienna demographer was 34, she and her partner started trying to have a child. They finally managed five years later, after using IVF.

“I would never have imagined, starting at 34, that I would have issues,” says Beaujouan, who is now 48 and has focused her research on late parenthood.

Delayed parenthood extends well beyond affluent urban professionals. “Postponement is now observed in all social strata,” she says.

Assisted reproduction can create false reassurance. It may improve the chances of conception, but it cannot guarantee a child or fully overcome the effects of age. “It is invasive,” she says. “It is expensive. It creates inequalities. Not many people can afford it. And of course, it often fails.”

The cost of children

The fertility problem reflects a basic economic contradiction: Children are essential to the welfare state, but economically disadvantageous to the households that raise them.

In the past, children contributed labor and provided security in old age. In modern welfare states, that role has largely disappeared. “Although having children is necessary for the functioning of the welfare system, they do not have an economic function within the household,” says Beaujouan.

For all the meaning and fulfillment they may bring, raising children is expensive, can interrupt careers and may reduce lifetime earnings. Bringing up a child costs roughly $320,000 for a middle-class family in the United States, according to inflation-adjusted estimates based on U.S. Department of Agriculture data. In Britain, the Child Poverty Action Group, an anti-poverty charity, estimates the cost at about £250,000. For a household solely concerned with financial security in retirement, that money may offer a greater economic return if it is saved and invested instead.

What may be rational for individual households, however, can be damaging when repeated across an entire society.

Martin Bujard, research director at Germany’s Federal Institute for Population Research, explains the problem from an office in Wiesbaden crowded with stacks of paper. Before the conversation can begin, the 50-year-old sociologist and father of two has to clear a space for our two cups of coffee.

For an industrial country, Bujard says, quality of life does not depend primarily on the number of inhabitants. The crucial factor is how many people are entering the labor market relative to those retiring.

“If that is roughly in balance, the economy and welfare systems work,” Bujard says. “If only a few young people come up behind while very many retire, things become tricky.”

Searching for solutions

Back in Vilardevós, Yaiza Ferreiro Collazos remains in the classroom after the lesson and talks about her own plans. The 30-year-old is childless, like all her female friends.

“We work, and afterward we want fun or time for ourselves,” she says.

Collazos and her friends sometimes discuss having families, but she worries about what motherhood would require her to give up. “If I had a child, I could no longer continue my current life,” she says. She also worries about how pregnancy would change her body.

Governments across Europe have spent years trying to make such decisions easier. So far, none has found a reliable way to reverse falling fertility.

Two decades ago, Germany launched a major expansion of childcare for children under three. The reform was aimed primarily at closing the gap between the former West and East Germany. During the years that followed, fertility rose from around 1.4 to around 1.6 children per woman. But then the gains petered out — and the rate fell again. By 2025, it had reached a new historic low of 1.32.

Hungary relied more heavily on financial incentives. Former Prime Minister Viktor Orbán’s government — proudly “illiberal” by its own description — offered parents bonuses and fiscal advantages, including an income-tax exemption for mothers with four or more children. Fertility rose from about 1.25 in the early 2010s to around 1.6 in 2021, before falling back to roughly 1.4.

Attempts at persuasion have fared no better. In 2016, Italy introduced a “Fertility Day” campaign. One advertisement showed a young woman holding an hourglass beside the slogan: “Beauty has no age. Fertility does.” The campaign provoked widespread outrage.

“It is very difficult to develop such campaigns,” says Beaujouan. “If you tell women at a later stage that if they do not start having children before such an age they will have trouble, then they start feeling guilty and anxious.”

Her assessment of the policy record is harsh. “I have not seen anything yet that would increase fertility rates,” she says. “Some policies can lay reasonable conditions for having children. And if they were not here, fertility may be even lower in some places. But they are rarely a motor of fertility rates.”

The immigration alternative

There is one response that has changed the demographic numbers where family policies and tax incentives have not: immigration. Spain offers perhaps the clearest example.

By the logic of its birth rate, the country should be shrinking. Instead, its population has grown from 46.5 million a decade ago to almost 50 million today. Foreign-born workers accounted for more than 70 percent of Spain’s employment growth between 2019 and 2024, according to an analysis by Esade, a prominent Spanish business school.

The country’s immigration policy is, however, hardly a template for the rest of Europe. Much of its recent immigration has come from Latin America, especially Colombia and Venezuela — countries where Spanish is the mother tongue and Christianity is the dominant religion. That does not make integration automatic. But it makes things easier.

In much of the rest of Europe, immigrants have been harder to absorb: Newcomers often arrive without the language, credentials or cultural familiarity that make it easier to find work and settle quickly. Migrants from Muslim-majority societies have also faced greater political and public pushback than Spain’s Latin America newcomers.

That may help explain why Prime Minister Pedro Sánchez has been more willing than most European leaders to embrace large-scale immigration. Spain, he argues, needs younger workers to keep its economy growing and its welfare state afloat. His government recently launched one of Europe’s largest regularization programs for undocumented migrants. By early July, 1.2 million people had already applied.

But immigration solves one demographic problem by creating a different political challenge. Sánchez’s critics argue that the government counts the economic benefits while underestimating the pressure on housing, schools and public services, as well as the difficulties of integration and social cohesion.

Spain’s conservative opposition and the far-right Vox party accuse Sánchez of rewarding illegal immigration. Vox leader Santiago Abascal has claimed that the government is creating a “pull effect” and accelerating what he calls an “invasion.”

The recent crisis in Ceuta, a Spanish exclave on Morocco’s northern coast, demonstrated just how politically explosive immigration has become in Europe. In late July, tens of thousands of migrants, almost all of them young men, crossed into the territory, overwhelming local authorities. Some factors remain disputed, including the role of the Moroccan government, but the political backlash was immediate: Twenty-two of the EU’s 27 leaders signed a letter warning that Madrid’s generous policies risked creating a “pull factor” for irregular migration and placing pressure on other member states.

This criticism is backed by a public increasingly skeptical of large-scale immigration. Recent polling by YouGov, a London-based opinion research firm, found that majorities in Britain, France, Germany, Italy, Sweden and Denmark said immigration over the past decade had been too high. In the United States, about half the population supports deporting immigrants back to their countries of origin.

The controversy will not be resolved anytime soon. Just as the consequences of collapsing birth rates take decades to become fully visible, the long-term effects of large-scale immigration unfold slowly.

Renewal and resistance

Luton, 1,350 kilometers north of Vilardevós and half an hour by train from London, offers a contrasting picture of Europe’s demographic future. The English city has just under a quarter of a million inhabitants. In 2024, its fertility rate was 2.0, the highest in the country. The national figure was about 1.4.

Data provided by the city administration points to one important difference: Women in Luton tend to have children earlier. One in three births is to a woman aged 25 to 29, compared with one in four across England. Births to women aged 35 to 39, by contrast, account for a larger share nationally than they do in Luton.

Immigration is central to that pattern. Two-thirds of babies born in Luton in 2025 had a mother who was born abroad, according to figures provided to POLITICO by the local council. Across England, the share was about one-third.

Tahmina Saleem, the Labour politician who chairs the town council, describes Luton as “super-diverse and proud of it.” Born in Sheffield to parents from Punjab, she argues that the city attracts families because it still offers jobs, including through its international airport, while housing remains cheaper than in London. Behind her, on the wall, hangs a portrait of King Charles III in a scarlet parade uniform.

The diversity is most visible in the neighborhood of Bury Park, where many newer families have settled. Shops, travel agencies and religious institutions reflect the area’s large Muslim population and its links to South Asia and elsewhere. Women in headscarves and hijabs are a common sight. Travel agencies advertise the Hajj and Umrah, the major and minor pilgrimages to Mecca, and grocery stores sell halal products.

Luton is also illustrative of the political backlash that large-scale immigration can engender.

While Saleem sees immigration as having made the city younger and more open, others see Luton as a symbol of a country becoming demographically and culturally unrecognizable.

The far-right English Defence League emerged in the city in 2009, drawing heavily from the football-hooligan milieu and organizing against immigration and Islam. Its best-known leader, Stephen Yaxley-Lennon, better known as Tommy Robinson, is also from Luton. Robinson has built his political identity on the same themes.

His influence now extends far beyond his hometown. In May 2026, Robinson drew roughly 60,000 supporters to a “unite the kingdom” rally in London, evidence that the grievances first mobilized in places such as Luton have become a national political force. The previous September, an even larger rally drew an estimated 110,000 people and featured a video link with Elon Musk, the tech billionaire who has repeatedly amplified Robinson’s agenda on his social media platform X.

“Tommy comes by now and then with cameras and foreign journalists to provoke us,” says Hamza Parker, a volunteer at Discover Islam Public Information Centre, a nonprofit organization in central Luton. “But he does not succeed.”

Limits of policy

Back in Vilardevós, Mayor Tamara Balboa García studies the population pyramid of her municipality. Of its 1,598 inhabitants, just 66 are 14 or younger. More than 960 are 60 or older. For every child or teenager, there are almost 15 senior citizens.

If the trend continues, García says, the village will eventually cease to have a future. But she insists that decline is not inevitable. The municipality helps returnees and newcomers find housing and work, particularly in agriculture, wine production and elder care. And even though the municipality is shrinking, it still has a supermarket, a pharmacy, a football pitch, an outdoor swimming pool, several bars, a bank branch and, of course, the school with its tiny classes.

A local nonprofit, Portas Abertas (“Open Doors”), plays a central role in the effort to keep the city alive. Andrea Rodríguez, the social educator who runs its local office, describes how the organization helped one immigrant family settle in the village: The mother, a trained nurse, found work quickly; the father was placed first as a truck driver and later as a baker; their child joined an after-school program.

Rodríguez’s own life is an example of what Portas Abertas wants to achieve. She left Vilardevós as a young woman for her training, but later returned. Four years ago, she bought a house for €92,000.

When the reporter looks at her incredulously, Rodríguez laughs. “It was even in good condition!”

Unlike the mayor, the schoolteacher and many other women in the village, Rodríguez has a child: a four-year-old daughter.

Before the reporter can ask whether she plans to have another child, Rodríguez answers.

“One child is enough.”

BERLIN — German Chancellor Friedrich Merz doesn’t seem to think his job will be in danger when he gets back from his summer holiday.

“I’m assuming that things will have calmed down a bit by September,” he said last week, after internal dissent over his handling of a cabinet reshuffle boiled over.

He may be underestimating the pressure building within his own party.

Ahead of crucial regional elections in September — in which the far-right Alternative for Germany (AfD) has a realistic chance of taking power in a German state for the first time — there is increasingly open discussion of a Kanzlertausch, or chancellor swap, in the fall.

Public criticism has mainly come from those ousted from government in the reshuffle. But behind the scenes, a growing number of politicians from Merz’s center-right Christian Democratic Union (CDU) are discussing what would, by German standards, be a remarkable scenario: replacing the leader after little more than a year in the job.

Europe’s biggest economy has long been one of its most stable democracies, with no history of rattling through leaders like postwar Italy or post-Brexit Britain.

But the expected success of the AfD, in elections in which the CDU is expected to lose ground, is upending the country’s conventional political dynamics.

The theory behind a Kanzlertausch is that the conservatives will need to stem the fallout from the eastern elections and give themselves a boost by replacing a leader unable to shake his rock-bottom ratings.

But the stakes are high. The AfD — now the most popular party in national polls — would seek to capitalize on further coalition unrest. Replacing a chancellor years before the end of his term would mean venturing into largely uncharted political territory.

Only three sitting chancellors have been succeeded by a politician from the same political camp in postwar Germany: in 1963, when the 87-year-old Konrad Adenauer resigned to make way for Ludwig Erhard; in 1966, after Erhard’s coalition collapsed; and in 1974, when Social Democrat Willy Brandt stood down over an espionage scandal.

The current Kanzlertausch scenario — in which Hendrik Wüst, the premier of the western state of North Rhine-Westphalia, has emerged as Merz’s most likely successor — has been widely discussed in German media, including in the latest Der Spiegel cover story headlined “Palace Revolt.” 

Conservative politicians confirmed the internal debate to POLITICO, speaking on condition of anonymity given the sensitivity of the discussions.

The growing discontent, they said, reflected declining trust in the chancellor’s statesmanship and his expected inability to keep the party together if the AfD takes power in September.

Polls show that the AfD could win an outright majority in Saxony-Anhalt on Sept. 6, while it is poised to win in Mecklenburg–Western Pomerania and do well in Berlin on Sept. 20.

A further fear is that individual CDU politicians in eastern Germany might lend their support to an AfD-led state government after the elections — breaking Merz’s long-standing pledge never to allow the far right into government.

One called the debate “speculative” for now and said that the aftermath of the elections in eastern Germany would be “decisive” for the chancellor’s future.

They also stressed that, for now, no senior figure has publicly spoken out against Merz.

Yet the mounting unease is conspicuous in a party usually known for its discipline.

Keeping a cool head

If Merz were forced to go, that would seriously disrupt Germany’s consensus-based political system. The move would come less than two years after the previous center-left coalition fell apart and could trigger a snap election.

Kai Arzheimer, a political science professor at the University of Mainz, said the fragmentation of Germany’s party system — where centrist parties must forge sometimes awkward coalitions to keep increasingly popular fringe parties from power — has triggered a shift.

“Compared with the 1970s and 1980s, Germany has experienced relatively little political stability for quite some time now,” he said. “However, by the standards of what has become the norm in many other European countries, one could also say that Germany has simply arrived where others have been for a long time.”

Appeals for restraint have meanwhile begun to emerge from across the political spectrum.

“A Union that is tearing itself apart is of no use to anyone in the democratic center,” said Christiane Hoffmann, a former spokesperson for center-left Chancellor Olaf Scholz, in a lengthy post on X about the current debate.

“A little stability, please,” she demanded. “There’s just headless grumbling and bleating, with no one knowing where it’s all headed. Europe is on fire. Could a few people please keep a cool head?”

How a swap could unfold

The least disruptive route would be for Merz to step aside voluntarily, allowing his successor to be elected by majority vote.

If Merz refuses to go, his opponents would have to oust him through a constructive vote of no confidence, simultaneously electing his successor. Such an extraordinary parliamentary maneuver would risk ripping apart the governing coalition of Merz’s CDU, its Bavarian sister party, the Christian Social Union (CSU), and the Social Democrats.

For now, Merz continues to enjoy the backing of leading conservative figures. 

“I am firmly convinced that Friedrich Merz will remain chancellor,” Markus Söder, the powerful state premier of Bavaria and CSU leader, said in an interview with public broadcaster ARD over the weekend. 

“It would throw the conservatives into complete disarray,” Söder said of a potential swap.

“Moreover, it could even lead to new elections. And anyone who wants new elections now — in a situation like this, after such a lead-up — is only promoting one thing: bringing radicals to power. That is why my urgent advice is to focus on the work at hand and spend less time speculating behind the scenes.”

At national level, POLITICO’s Poll of Polls puts the AfD as the single most popular party with 28 percent support, with Merz’s conservatives on 21 percent.

At the same time, only 13 percent of Germans are satisfied with Merz’s performance, according to the latest benchmark ARD-DeutschlandTrend poll released last month. That is the lowest rating for a sitting chancellor in the survey’s nearly 30-year history.

Merz’s rock-bottom ratings reflect disappointment over his efforts to revive Germany’s ailing economy and public skepticism over far-reaching pension and health care reforms that will be difficult to implement and are expected to cost the average voter money. 

For now, Merz’s most viable political strategy appears to be appealing to politicians’ risk aversion in an effort to preserve what remains of Germany’s reputation for political stability.

“I can’t imagine many people within the conservative camp saying: ‘This is the solution, and we’re willing to take any risk in the hope that we might then do better in the polls,’” said Arzheimer, the political science professor. “That would be a completely crazy idea.”