France's public debt is on track to reach its highest level since 1978, according to the country's finance ministry, which revealed over the weekend that the debt-to-GDP ratio is projected to hit 119.3% in 2026 and 121.7% in 2027. These figures, unprecedented in nearly half a century, underscore the mounting pressure on Paris to rein in its public finances.
The ministry source, speaking to reporters, described the rise as "automatic," a direct consequence of a persistently high deficit. France's statistics institute Insee confirmed that such levels have not been seen since 1978, highlighting the severity of the fiscal strain.
France now ranks as the third most indebted country in the eurozone, trailing only Greece and Italy. In contrast, Spain's debt fell below 100% of GDP in July, and Portugal managed to bring its ratio under 90% in 2025, illustrating a widening gap within the currency bloc.
Deficit remains far above EU limits
Under European Union rules, member states are expected to keep their public deficit—the annual shortfall between revenue and spending—at or below 3% of GDP. France, however, recorded a deficit of 5.1% last year, and the government forecasts it will rise to 5.4% this year. This persistent overshoot has kept France under special EU monitoring for the past two years.
The government expects the deficit to ease to 5% next year, a year that will also see presidential and parliamentary elections. The draft 2027 budget has been submitted to the High Council of Public Finances (HCFP), an independent watchdog, for an assessment of its macroeconomic viability.
Massive cuts planned for 2027
Prime Minister Sebastian Lecornu, presenting the draft budget on Thursday, outlined plans for adjustments and cuts worth €54 billion ($62 billion) in the 2027 budget. However, with elections looming, he has deferred some of the more politically sensitive measures to parliament, including a proposal to reduce tax breaks for pensioners.
The head of the parliament's finance committee has already voiced concerns that the cuts would affect all segments of the population indiscriminately, hitting the poorest hardest. Yet, in an interview with Le Parisien, the head of the HCFP, Amelie de Montchalin, struck a cautiously optimistic tone.
"The crisis is neither certain nor guaranteed—nor is it the only outcome," she said. "France is not doomed, provided the choices made are swift and responsible."
The economic backdrop remains challenging. Growth forecasts for 2026 have been revised downward, with the French economy hampered by weak consumer spending and, more recently, by the surge in energy prices linked to the US-Israeli conflict with Iran. These headwinds complicate the government's efforts to stabilize public finances without stifling growth.
France's fiscal trajectory is being closely watched across Europe, as it has implications for the stability of the eurozone. The country's ability to implement credible reforms will be a key test of its commitment to EU fiscal rules, especially as other member states like Greece have managed to outborrow France, a sign of shifting market trust.
As the debate over the budget intensifies, the coming months will reveal whether France can navigate its fiscal challenges without triggering a broader crisis of confidence in the single currency.
