French public debt rose to an unprecedented 3,595.5 billion euros at the end of June, equivalent to 119% of GDP, according to data released by the National Institute of Statistics and Economic Studies, or INSEE, on Tuesday, 29 September.
Increase in debt during the second quarter
Public debt increased by 59.6 billion euros between the end of the first quarter of 2026 and the end of the second quarter, after rising by 75.8 billion euros in the first quarter, when it stood at 117.5% of GDP.
The debt-to-GDP ratio reached its highest level since 1946, when France was dealing with the aftermath of World War II. During the second quarter, both central government debt and social security debt increased, while local government debt declined.
The government warned in September that public debt could reach 121.7% of GDP in 2027, more than double the European ceiling of 60%, at an unprecedented level since INSEE began publishing these statistics in 1978.
Debt-servicing costs set to reach 91 billion euros
The expansion of the debt burden coincided with higher interest rates compared with the low, and sometimes negative, levels seen after the COVID-19 pandemic in 2020 and 2021. France will pay about 79 billion euros to its creditors in 2026, while the government expects debt-servicing costs to rise to 91 billion euros in 2027.
Investors are now demanding interest rates approaching 5% to lend to the French state for 10 years, an unprecedented level since 2008 and the subprime mortgage crisis, increasing the interest payments expected in the coming years.
Pressure on the 2027 budget bill
The debt-servicing burden is adding to pressure on public finances and complicating preparations for the 2027 budget bill, due to be presented on 1 October. The bill prepared by Sébastien Lecornu and his government aims to reduce the public deficit to 5% of GDP, after postponing the target by one year compared with the previous plan.
Several economists believe that meeting the deficit target faces risks linked to the presidential campaign and the constraints it imposes on launching deep structural reforms. Continued increases in interest rates could also raise the debt burden on the state budget and alter the debt-servicing cost estimates included in the finance bill.
