France’s Debt Heads Toward Record 119% of GDP

France’s Finance Ministry expects public debt to rise to a record 119.3% of gross domestic product in 2026, before climbing to 121.7% in 2027, as the budget deficit persists and borrowing costs rise in the bond market.

Debt rises by more than 19 percentage points

The debt-to-GDP ratio stood at 115.7% in 2025, up from below 100% in 2019, meaning it has risen by more than 19 percentage points from pre-Covid-19 pandemic levels.

The Finance Ministry submitted its projections to the High Council of Public Finance, an independent body responsible for assessing the credibility of the revenue and spending forecasts contained in the draft budget.

Deficit expected at 5.4% in 2026

The French government expects the budget deficit to reach 5.4% of gross domestic product in 2026, compared with 5.1% in 2025, before declining to 5% in 2027.

The government says stabilizing public debt requires reducing the deficit to 3% of gross domestic product, a target it aims to reach by 2029.

Fiscal measures worth 54 billion euros

Prime Minister Sébastien Lecornu plans to include fiscal measures worth 54 billion euros, about 62 billion dollars, in the 2027 budget in an effort to prevent the deficit from continuing to widen.

The government faces the challenge of passing austerity measures through a divided parliament, amid mounting pressure on households from the cost of living. The draft state and social security budgets are scheduled to be presented to the cabinet on October 1 before being submitted to parliament.

Widening premium on French bond yields

The yield premium France pays on its bonds compared with Germany exceeded a full percentage point on Friday for the first time since the euro zone debt crisis, reflecting investor concerns about the trajectory of debt and deficits.

A widening spread means investors are demanding a higher yield to hold French bonds than comparable German bonds, adding pressure on the government to deliver a sustainable reduction in the deficit.