France’s debt hits record 3.6 trillion euros, financial pressure rises ahead of 2027 elections

France is heading towards the 2027 presidential elections facing a difficult financial situation. The country’s public debt reached 3.595 trillion euros at the end of June, rising by around 60 billion euros in just three months. According to the latest data, the debt now stands at around 119% of Gross Domestic Product, the highest level recorded in France since 1946.

The situation differs markedly from the pandemic period. In 2020-2021, France was able to finance high spending with low borrowing costs. Today, interest rates are much higher.

The yield on French 10-year bonds is around 4.7%-4.8%, while the spread with German bonds has passed 110 basis points. This raises financing costs for the state and limits the scope for other public spending.

Debt expected to pass 120% of GDP

The French Finance Ministry forecasts that public debt will reach 119.3% of GDP at the end of 2026 and 121.7% in 2027. The European Commission also expects the debt to pass the 120% of GDP level next year.

At the same time, the French economy is expected to grow slowly. The European Commission forecasts growth of 0.8% for 2026 and 1.1% for 2027.

The deficit remains another concern. Without new measures, it could reach 5.7% of GDP in 2027. France has been under the EU’s excessive deficit procedure since 2024 and aims to bring the deficit below 3% by 2029.

One of the biggest costs for the budget is expected to be debt servicing. The French government estimates interest payments will reach around 91 billion euros in 2027, while 100 billion euros could be exceeded in 2028.

Government seeks 54 billion euros in savings

To curb the rise in the deficit, the French government is seeking around 54 billion euros of fiscal measures. Around 40 billion euros are needed to meet the automatic increase in spending, while another 14 billion euros are additional measures to consolidate public finances.

The plan includes limiting the growth of state spending, cutting spending by ministries and public organisations, and interventions in the pension system and some tax breaks.

At the same time, the Defence budget is expected to rise by 6.4 billion euros.

The measures have sparked a social backlash. Unions, civil servants and students have opposed the proposed cuts and warned of further protests.

The 2027 elections and the economic challenge

The financial problem coincides with an important political period. Presidential elections in France are scheduled for 18 April 2027, while the second round is expected to be held on 2 May.

Emmanuel Macron cannot run for a third consecutive term. As a result, the next president will face a difficult fiscal situation from the outset and the need to secure parliamentary support for the necessary measures.

Debate on the economy has already begun among political forces. In the centre and on the right, measures to cut spending and reform pensions are being discussed, while on the left other alternatives for managing the debt have been proposed.

An issue for the Eurozone too

France’s fiscal problems matter beyond its borders. The country is the European Union’s second-largest economy and one of the main debt issuers in the Eurozone.

For this reason, a further rise in borrowing costs or difficulties stabilising the debt could also have consequences in European markets.

France currently still has access to financial markets and is not in a situation similar to the Eurozone debt crisis of 2010-2012. However, the combination of high debt, a large deficit, weak economic growth and high interest rates is increasingly narrowing the government’s fiscal space.

The president who takes charge of France in 2027 will thus face one of the country’s biggest economic challenges in recent decades: curbing debt and the deficit, without further worsening social and political pressure.