French Finance Ministry Projects Record Debt of Nearly 120% of GDP by 2026
France's Rising Debt and Fiscal Challenges
Debt Projections and Historical Context
PARIS, Sept 19 (Reuters) - France's debt is expected to reach a record high of 119.3% of output in 2026, with a projected debt-to-GDP ratio of 121.7% in 2027, the finance ministry said on Saturday, in the latest indication of the country's deteriorating public finances.
The finance ministry made the projection in a declaration to the High Council of Public Finances, the body tasked with evaluating revenue and expenditure forecasts in the government's budget proposal. In 2025, France's debt-to-GDP ratio was 115.7%, and it was below 100% in 2019, according to government data.
Deficit Expectations and Government Response
Current and Projected Deficit Levels
The ministry also said it expects to end the year with a budget deficit of 5.4%. Prime Minister Sebastien Lecornu said on Thursday he expected the 2026 deficit to be well below 5.5%.
Austerity Measures and Political Challenges
Lecornu has announced plans to include a €54 billion ($62 billion) savings drive in his 2027 budget to stop the deficit spiralling out of control, but he faces a tough task to push austerity measures through a deeply divided parliament amid mounting pressure from voters over the cost of living.
Market Reaction and Investor Concerns
Bond Market Premiums
The premium France pays to borrow on the bond markets compared to Germany rose to more than a whole percentage point on Friday for the first time since the euro zone debt crisis, underscoring investor unease with its stretched finances ahead of elections next year.
Exchange Rate Information
($1 = 0.8709 euros)
(Reporting by Gabriel Stargardter; Editing by Kirsten Donovan and Ros Russell)
