"A degraded financial situation" : how the war in Iran is hollowing out the Social Security budget

The publication of the spring report of the Social Security Accounts Commission has rekindled concerns about the state of French public finances. Already weakened by the economic slowdown and the continued rise in health spending, Social Security could see its deficit widen further under the effect of geopolitical tensions in the Middle East.
According to the Social Security Accounts Commission, the deficit could reach “23.2 billion euros, or 0.8 points of GDP”, a deterioration of 3.8 billion compared to the 19.4 billion deficit forecast in the Social Security budget.

Without directly mentioning the war in Iran, a report from the Court of Auditors on the application of social security financing laws published on May 27, also warns of the “deterioration of the economic situation linked to the geopolitical context”. “Social security no longer has room to maneuver to absorb economic shocks,” she assures.

An increase in public health spending

At first glance, the link between a conflict in the Middle East and the French Social Security budget may seem distant. However, the financial situation of social security depends closely on the global economic situation. The war in Iran has caused significant energy instability, particularly because of tensions around the Strait of Hormuz, a strategic passage through which 20% of the world’s oil passes.

The partial closure of this sea route and fears of supply disruption have led to a rise in energy prices and reignited inflationary tensions. This inflation has a direct impact on Social Security spending. Hospitals, medico-social establishments and the entire health system are experiencing increased operating costs: energy, transport, food, medicines and even medical equipment.

Added to this are the automatic mechanisms for revaluing certain social benefits and remuneration. The general rise in prices therefore automatically leads to an increase in public health spending. The Court of Auditors also underlines that expenditure is already growing faster than revenue, with an increase of 3.6% in expenditure compared to only 2.6% for revenue.

Too little revenue growth

The conflict also acts on another essential lever: economic growth. In times of international crisis, businesses invest less, consumption slows and economic activity slows down. However, Social Security is mainly financed by social contributions deducted from salaries as well as by the CSG. If growth slows and employment increases less quickly, social revenues automatically decrease.Â

“The spontaneous increase in revenue was weak in 2025 (1.6%), lower than that of national wealth (2.1%): the wage bill and household consumption, on which a large part of social security contributions are based, were not very dynamic,” writes the Court of Auditors in his report.

A situation that was already worrying before the war