France’s Public Debt Hits Record 119% Of GDP As 2027 Election Debate Intensifies

France’s public debt has reached a record 119 per cent of gross domestic product, putting the country’s strained finances at the centre of the political debate ahead of the 2027 presidential election.

Debt stood at 3.596 trillion euros at the end of June, up 59.6 billion euros from the previous quarter, according to France’s statistics agency INSEE. The debt-to-GDP ratio rose from 117.5 per cent in the first quarter and is the highest level recorded since the aftermath of World War II. It was 97.9 per cent in 2019 before the COVID-19 pandemic.

The latest concern is that the debt is still expected to rise despite government efforts to rein in spending. France’s draft 2027 budget targets a deficit of 5 per cent of GDP, down from an expected 5.4 per cent this year. The government has announced around 54 billion euros in savings, including a freeze on public-sector wages and most pensions, tighter healthcare and local-government spending, and changes to employer tax breaks.

France will nevertheless need to borrow heavily. The Agence France Trésor estimates the state’s 2027 financing requirement at 339.7 billion euros, 28 billion euros more than the updated 2026 requirement. About 19.4 billion euros of the increase is linked to medium- and long-term debt issued during the pandemic and energy crisis that is coming due.

Government projections indicate public debt could rise to about 121.7 per cent of GDP in 2027, even if the deficit target is met.

Higher interest rates are adding to the pressure. France’s 10-year borrowing costs reached around 4.96 per cent on Thursday, according to Reuters, as investors assessed the country’s fiscal position and political uncertainty. Interest costs are expected to consume an increasingly large share of public spending.

France has not balanced its budget since 1973. Debt increased sharply after the pandemic and the energy crisis that followed Russia’s invasion of Ukraine, when the government spent heavily to support households and businesses.

The issue is now also a political battleground. Radical-left leader Jean-Luc Mélenchon has proposed effectively freezing or cancelling French bonds held by the European Central Bank, a plan ECB President Christine Lagarde has rejected as incompatible with EU treaty rules.