By Paul de Neuville, Paris correspondent, for Eurasia Business News – September 19, 2026. Article no 3179
France’s public debt is projected to climb to 121.7% of gross domestic product in 2027, underscoring the scale of the country’s fiscal challenge as the government prepares a politically difficult budget plan. The Finance Ministry expects the debt ratio to rise from 115.6% in 2025 to 119.3% in 2026 before reaching a record level in 2027—more than double the European Union’s 60% reference threshold.live.
The deterioration comes as Prime Minister Sébastien Lecornu’s government seeks to combine spending restraint, tax increases and targeted savings in a €54 billion fiscal-consolidation effort. But the measures are likely to face resistance from opposition parties, trade unions and voters already frustrated by high fuel prices and weak purchasing power.
France’s Debt-to-GDP Ratio Reaches a Record
The government’s latest projections show that the public-debt burden will continue rising even if the 2027 budget delivers its planned fiscal adjustment.
| Year | French public debt | Budget deficit target / forecast |
|---|---|---|
| 2025 | 115.6% of GDP | 5.1% of GDP |
| 2026 | 119.3% of GDP | 5.4% of GDP |
| 2027 | 121.7% of GDP | 5.0% of GDP |
The projected 2027 ratio would represent France’s highest debt burden since at least 1995. It is also substantially above the EU’s 60% debt reference value and comes as Paris remains under enhanced EU scrutiny for running deficits above the bloc’s 3% ceiling.
French officials attribute the continuing rise in debt largely to a deficit that remains too high. Even if the government succeeds in reducing the deficit to 5% of GDP in 2027, the gap between state revenue and spending would still add to the debt stock. A deficit closer to 3% of GDP is generally required to stabilize the debt ratio, depending on economic growth, inflation and the government’s borrowing costs.
Why France’s Fiscal Position Is Worsening
France’s debt challenge is the product of several interconnected pressures.
First, public spending remains structurally high. The Finance Ministry expects general-government expenditure to represent 57.1% of GDP in 2026 before easing modestly to 56.9% in 2027. That figure includes pension payments, healthcare, education, unemployment support, local-government spending, defense and interest costs. Such a level of public expenditure is higher than USSR in the 1980’s and is the highest in Europe now.
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Second, slower growth limits the state’s ability to raise tax receipts organically. When GDP expands weakly, revenues grow more slowly, while welfare and social spending can remain difficult to reduce.
Third, higher interest rates are increasing the cost of servicing government debt. France refinances maturing bonds and issues new debt at rates that are generally higher than those available during the low-rate period that followed the eurozone debt crisis and the Covid-19 pandemic. Rising interest expenses can create a damaging feedback loop: larger deficits add to debt, and a larger debt stock becomes more costly to finance.
Finally, political instability complicates budget-making. The government must build parliamentary support for savings and tax increases, while avoiding measures that trigger a broad social backlash. Fuel-price pressures, public-sector concerns and arguments over pensions make fiscal consolidation especially difficult.
The €54 Billion Budget Challenge
Lecornu has outlined a €54 billion fiscal effort for the 2027 budget. Without cost-saving measures, the government estimates that the deficit would exceed 6.5% of GDP next year. Its plan aims to reduce the projected deficit to 5% of GDP through a mix of spending restraint and higher taxes.
The government says its spending plan will comply with European fiscal guidance. Net primary expenditure—the measure that excludes interest costs and some cyclical items—is expected to rise 0.7% in 2027, below the 1.2% ceiling recommended by the European Commission.
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However, the plan leaves France with limited room for error. Lower-than-expected economic growth, higher unemployment, renewed energy-price shocks or an increase in bond yields could make deficit targets harder to achieve.
Political Risks for France
The debt outlook is emerging against a tense political backdrop. Cuts to public spending can provoke resistance from unions, local authorities and voters who rely on public services. Tax increases, meanwhile, risk weakening consumer confidence and business investment.
The government has already faced pressure to extend support for households and businesses affected by surging fuel prices. These emergency measures can be politically necessary, but they add to the difficulty of meeting fiscal targets.
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The 2027 presidential and parliamentary elections raise the stakes further. Any government proposing tax increases, pension reforms or spending cuts may face a choice between fiscal credibility and political survival.
What It Means for Markets and Europe
France’s debt trajectory is important not only for Paris but for the wider eurozone. France is the EU’s second-largest economy and a core issuer in European government-bond markets. A sustained loss of investor confidence could widen the spread between French and German borrowing costs, raising financing expenses for the French state.
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The projected rise to 121.7% of GDP does not mean an immediate sovereign-debt crisis. France benefits from a large, diversified economy, deep capital markets and euro-area membership. But it does show that the country’s fiscal problems are becoming harder to postpone.
The central question is whether France can implement credible, durable reforms before weak growth, high interest costs and political fragmentation turn a long-term debt problem into a more acute market crisis.
France’s richest individuals have shown increased emigration in 2025 and 2026 amid debates over tax hikes, including the “forced loan” proposal and wealth taxes like the Zucman tax, prompting more and more French millionaires to relocate for lower-tax jurisdictions. Reports indicate that the past two years mark a year of “exode” (exodus) for millionaires, reversing a 2023 influx from Brexit, with wealthy households seeking destinations like Belgium, Switzerland, or the UAE to avoid potential levies on high earners and assets.
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© Copyright 2026 – Eurasia Business News. Article no. 3179
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