France's public debt is expected to reach 119.3% of its gross domestic product (GDP) in 2026 and 121.7% in 2027, nearly double the European Union's reference ceiling of 60% of GDP. This is the highest level since 1995, according to the National Institute for Statistics and Economic Studies. The increase is attributed to a high budget deficit, with the country's deficit reaching 5.1% of GDP last year and expected to be 5.4% this year.
The European Union's rules state that the general deficit should not exceed 3% of GDP. France has been under special monitoring by the EU for two years due to its high deficit. The government expects the deficit to decrease to 5% next year, which is also an election year for the presidency. The country's economy has been slowing down since the third quarter of last year, affected by weak consumer spending and high energy prices due to the conflict.
The French government has presented its 2027 budget to the High Council for Public Finance, an independent body that evaluates the budget's feasibility from a macroeconomic perspective. The government plans to make adjustments and reduce spending by €54 billion ($62 billion) in the 2027 budget. However, some sensitive measures, such as a proposed reduction in tax exemptions for retirees, have been left to the parliament to decide.
The country's economic growth has been impacted by the conflict, with a slowdown in the second quarter and an increase in inflation. The inflation rate in France was 5.2% in 2022. The government is trying to address these challenges while also preparing for the upcoming presidential election. The country's public debt has been increasing, and the government is under pressure to reduce it.
France's public debt has significant implications for the country's economy and its position within the European Union. The EU has been monitoring France's budget deficit and debt levels, and the country is under pressure to comply with EU rules. The government has proposed measures to reduce the deficit and debt, but it remains to be seen whether these measures will be effective.
The increase in France's public debt is a concern for the country's economy and its ability to meet its financial obligations. The country's debt levels have been rising, and the government is under pressure to take action to reduce them. The situation is being closely watched by investors and EU officials, who are concerned about the potential impact on the country's economy and the wider European economy.
The French government's efforts to reduce the budget deficit and debt levels will be crucial in determining the country's economic future. The government faces significant challenges in addressing these issues, but it is under pressure to take action to reduce the country's debt levels and comply with EU rules. The situation will continue to be closely monitored by investors and EU officials.
Key points
- France's public debt is expected to reach 119.3% of GDP in 2026 and 121.7% in 2027.
