Economy 3 min read By Callum Montgomery
France Faces Record Debt of Nearly 120% of GDP in 2026
The French finance ministry expects public debt to hit a record high in 2026, approaching 120% of GDP, as borrowing costs and deficits mount.
France is on course to set a new record for public debt in 2026, with the finance ministry projecting that the country's obligations will approach 120% of gross domestic product. The forecast, which underscores the deepening strain on the eurozone's second-largest economy, comes as Paris grapples with sluggish growth, elevated borrowing costs and persistent budget deficits.
The ministry's estimate places France among the most indebted nations in the European Union, trailing only Greece and Italy in relative terms. At nearly 120% of GDP, the debt ratio would mark a significant increase from pre-pandemic levels, when French public debt stood at around 98% of GDP. The projected rise reflects years of heavy government spending, including emergency support for households and businesses during the energy crisis and the Covid-19 pandemic, as well as recent tax cuts that have yet to be offset by spending reductions.
Economists warn that such a high debt burden leaves France vulnerable to shifts in investor sentiment and rising interest rates. The European Central Bank's tightening cycle has already pushed up the cost of servicing French debt, diverting resources from other priorities. In 2024, France's debt servicing costs exceeded €50 billion, and they are expected to climb further in the coming years. The finance ministry's forecast suggests that without corrective measures, the debt trajectory will continue to deteriorate, potentially complicating France's ability to respond to future economic shocks.
The government has pledged to bring the deficit under control, aiming to reduce it to below 3% of GDP by 2027 in line with EU rules. However, political fragmentation and resistance to spending cuts have made that target increasingly difficult to achieve. Prime Minister Michel Barnier, who took office in September, has signalled a willingness to tackle the fiscal imbalance, but his minority government faces opposition from both the left and the far right. The budget for 2025, currently under discussion, includes measures to raise taxes on large corporations and wealthy individuals, alongside spending restraints, but critics argue these steps are insufficient.
Rating agencies have taken note. Moody's and Fitch have both downgraded France's credit outlook in recent months, citing political instability and fiscal slippage. A further downgrade could raise borrowing costs even higher, creating a vicious cycle that makes debt reduction harder. The finance ministry's projection of nearly 120% debt-to-GDP in 2026 serves as a stark reminder of the challenges ahead, and it is likely to intensify the debate over France's economic direction at a time when public finances are already stretched thin.
