Source: Fortune
Summary
France’s public debt has reached a record 122% of GDP, according to government data, as the country struggles to balance its budget. The debt, now at 3.596 trillion euros, is expected to grow despite proposed spending cuts. The issue has become a central topic in the upcoming presidential election, with candidates offering differing solutions. Radical-left candidate Jean-Luc Melenchon proposed canceling government bonds held by the European Central Bank, a plan criticized by ECB President Christine Lagarde as a violation of EU rules.
Our Reading
The numbers tell one story.
France’s debt hits 122% of GDP, a new record.
Candidates debate how to fix it, with Melenchon’s plan drawing fire.
Lagarde calls the idea a “pure violation” of EU rules.
Debt service costs now outpace defense and education spending.
Author: Evan Null
Record-High Levels
France’s public debt has reached a record high, standing at 119% of GDP as of June 2026. This is a significant increase from 97.9% in 2019, before the pandemic. The debt is now 3.596 trillion euros, or $4.08 trillion. This level of debt is among the highest in the eurozone, though it is still lower than that of Greece and Italy. The U.S. also has a high debt-to-GDP ratio, at 122.6%, but benefits from having the world’s reserve currency.
France Needs to Borrow to Finance Budgets
Every year, France prepares a budget that is funded primarily through taxes and levies. However, public expenditure has consistently exceeded revenue, leading to a budget deficit. To cover this gap, the government takes on loans, which contribute to the public debt. Deficits are a concern because they can lead to higher interest rates on government borrowing, as investors demand more return for lending money to the state.
First the Pandemic, Then an Energy Crisis
France last balanced its budget in 1973, and since then, accumulated debt has been high, though manageable due to low interest rates. The pandemic and the subsequent energy crisis after Russia’s invasion of Ukraine forced the government to spend heavily on subsidies. This led to a sharp rise in public debt, which increased from 98% of GDP in 2019 to 114% in 2020. Interest rates also rose, increasing the cost of borrowing for the government.
The Impact of the Debt on France’s Budget
As public debt grows, so does the cost of servicing it. Interest payments now account for around 7% of the state budget. With higher interest rates, these costs are expected to exceed 90 billion euros in 2027. This is more than the government plans to spend on defense or education. The rising debt burden is putting pressure on public finances and limiting the government’s ability to invest in other areas.
A Stable Outlook, but Some Credit Rating Agencies Are Worried
Credit rating agency Scope downgraded France’s long-term ratings in September, citing a deteriorating fiscal outlook. However, Fitch Ratings has maintained France’s sovereign credit rating at “A+” with a stable outlook, citing the country’s strong economy and financial system. Despite this, concerns remain about the government’s ability to reduce deficits and implement structural reforms.
