France’s Finance Ministry said Saturday that public debt as a share of gross domestic product will reach 119.3% in 2026, its highest level since debt began being monitored under the current methodology in late 1995, before rising to 121.7% in 2027, driven by the continued sharp budget deficit.
Deficit exceeds European ceiling
A ministry source told reporters that France’s rising debt was occurring “automatically” as a result of the “continued high budget deficit.” Projected debt levels are approaching twice the reference ceiling of 60% of gross domestic product, which European Union countries are expected to meet.
European Union rules stipulate that the general deficit — the annual gap between revenue and spending — must not exceed 3% of gross domestic product. France’s deficit, however, stood at 5.1% of gross domestic product last year, while the government expects it to reach 5.4% this year.
France has been under special European Union monitoring for the past two years because of its high deficit, while Paris expects it to fall to 5% next year, as presidential elections approach at the end of President Emmanuel Macron’s second and final term.
Spending cuts in the 2027 budget
The government submitted its 2027 budget bill to the High Council of Public Finance, an independent fiscal oversight body, to assess its feasibility from a macroeconomic perspective.
Prime Minister Sébastien Lecornu said Thursday that the government plans to make adjustments and cut spending by 62 billion dollars (54 billion euros) in the 2027 budget. With the elections approaching, the government left Parliament to decide on some of the more sensitive measures, including a proposal to reduce tax exemptions granted to retirees.
French economy slows
The French economy has been slowing since the third quarter of last year, affected by weak consumer spending and rising energy prices because of the U.S.-Israeli war on Iran.
