France’s Finance Ministry said on Saturday that the public debt-to-GDP ratio will reach 119.3% in 2026, its highest level since debt tracking under the current methodology began in late 1995, before rising to 121.7% in 2027.
Deficit exceeds European ceiling
A ministry source said France’s rising debt was occurring “automatically” as a result of the “continued high budget deficit.” The projected debt ratios are approaching twice the reference ceiling of 60% of GDP, which European Union countries are expected to comply with.
Under European Union rules, the general government deficit, the annual gap between revenue and spending, should not exceed 3% of GDP. But the deficit stood at 5.1% of GDP last year, and the government expects it to reach 5.4% this year. France has also been under special European Union monitoring for two years because of its high deficit.
Paris expects the deficit to fall to 5% next year, coinciding with the scheduled presidential election and the end of President Emmanuel Macron’s second and final term.
2027 budget spending cuts
The government submitted its 2027 budget bill to the High Council of Public Finance, an independent fiscal watchdog, to assess its feasibility from a macroeconomic perspective.
Prime Minister Sébastien Lecornu said on Thursday that the government plans to make adjustments and cut spending by 54 billion euros (62 billion dollars) in the 2027 budget. The government left parliament to decide on some of the most sensitive measures as the election approaches, including a proposal to reduce tax exemptions granted to retirees.
The French economy has been slowing since the third quarter of last year, hit by weak consumer spending and higher energy prices because of the American-Israeli war on Iran.
