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Anger over the cost of living and pressure on public services has brought hundreds of thousands of protesters onto streets across several European countries, with grievances ranging from expensive housing to poor conditions in schools and universities. France saw the largest demonstrations at the weekend, with more than 500,000 people marching. Most protested peacefully, but some looted and vandalized shops, set fire to city halls and attacked police officers. Separate protests also took place in Italy, Spain, Portugal and Albania on Saturday and Sunday. Their immediate triggers differed, although high fuel and energy costs formed part of the backdrop in several countries. The wars in Iran and Ukraine have pushed diesel prices sharply higher across the continent. There's no one "single trigger" for the riots, Capital Economics' Chief Europe Economist Andrew Kenningham told CNBC. The increase in energy costs may be playing a role, but the increase is smaller than in 2022, at the onset of the Russia-Ukraine war, when there were no comparable violent protests, he added. Nevertheless, the demonstrations pose a shared challenge for governments: how to improve living conditions and maintain public services while supporting households and keeping strained public finances in check. What sparked the protests? The demonstrations in France began last month when high school students criticized poor schooling conditions, including shoddy facilities and teacher shortages. They have since evolved into broader protests over living standards and declining public services. In Spain, housing protests began in September after an 87-year-old woman, Maricarmen Abascal, was evicted following a 230% rent increase by an investment fund. She died a fortnight later. Thousands of protesters also took to the streets in Portugal on Saturday to demonstrate against soaring housing costs and the cost of living. "People obviously are protesting on the cost of living with diesel and fuel prices, but mainly on housing costs, which have been increasing substantially all over Europe, but also particularly in Portugal," Miranda Sarmento, Portugal's minister of state and finance, said Monday. In Albania, protesters were angry about poor university conditions and high tuition fees, and called for the resignation of Prime Minister Edi Rama. Some threw Molotov cocktails and other objects at the police and set fire to cars and litter bins. In Italy, a march in central Milan on Saturday over living costs also ended violently, with rioters attacking the police with stones and paving blocks and setting fire to barricades. "The underlying problem is that politicians are not able to offer hope of a better life for many Europeans because the economy is growing only slowly and governments have built up huge debts, leaving them little scope to support higher public spending or to cut taxes," Capital Economics' Kenningham said. Why now? The escalation of violence in France in particular is due to a "conjugation of different elements," said Douglas Yates, a professor at the American Graduate School in Paris. "This was a storm that turned into a hurricane," Yates told CNBC's Steve Sedgwick. "There was this inflation, which has brought out the cost-of-living protesters who would have been disgruntled at any rate." Yates said another factor is France's 2027 presidential election, as opposition parties seek to capitalize on growing public discontent with President Emmanuel Macron. Prime Minister Sébastien Lecornu has proposed a 2027 budget aimed at narrowing France's deficit, projected at 5.4% of gross domestic product this year. Measures include freezing the civil service pay index and tightening reimbursement for sick leave. "Finally there's the students, the poor students who started this by making reasonable demands for having their dilapidated infrastructure repaired and perhaps getting some air conditioners installed in the classrooms, and so these three forces have come together and created an out-of-control hurricane," Yates added. The economic backdrop has also deteriorated. In the second quarter of 2026, France's unemployment rate rose to 8.3%, representing 2.7 million people, according to Insee, the national statistics bureau. The unemployment rate among 15- to 24-year-olds climbed to 21.6%. Consumer prices rose 3.1% in September from a year earlier, up from 2.4% in August, according to final Insee data. Energy prices jumped 21.3%. Meanwhile, purchasing power per consumption unit is projected to fall 0.7% in 2026, according to Insee figures, cited by Le Monde. Calculations by the French Institute of Economics for Le Monde estimate that the decline in purchasing power since 2024 is equivalent to a loss of 1,200 euros ($1,345) a year for a household with two adults and two children, and 600 euros for a single adult. Portugal's Sarmento said that the situation across Europe varies, with Portugal in a stronger fiscal position and with much less debt than France. "Those countries [those with higher public debt] have much less fiscal margin to act, but the main issue is that we need to resolve the problem of productivity and competitiveness at the European level," he said. "The European economy is not growing as much as the U.S., and without economic growth, it's impossible to have better salaries and to have the resources for better public services and social support," Sarmento added. In the second quarter of 2026, Portugal recorded the EU's highest annual increase in house prices, up 16.5% from a year earlier, according to Eurostat. The Portuguese government is looking to increase the supply of housing to reduce buying and renting costs to resolve the issue, according to Sarmento. France's fiscal pressure French government bond yields rose and the euro weakened on Monday as the unrest added to investor concerns over France's debt and budget. "It will be difficult to see the budget deficit come down without painful measures," Sharon Bell, senior European equity strategist at Goldman Sachs, told CNBC's "Squawk Box Europe" on Monday. "Taxes could well go up for French businesses. I think taxes may generally go up in France. Fiscal consolidation means you need to either spend less or tax more. Those things are very tricky." Mike Bell, head of market strategy at RBC BlueBay Asset Management, said France faced a "very real risk" of a sovereign debt crisis. "What's needed in France is to get the fiscal position in order; they need to raise the retirement age — you can't retire at 62 if the average person's living to 84 — but if this is going on even before they start talking about that, then imagine what would happen on the streets of France if you tried to raise the retirement age... I mean, here in the U.K. it's 68," Bell added.
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