Phoenix 24
Rising borrowing costs are turning fiscal weakness into a broader political constraint.
Paris
France’s public debt reached a record 3.5955 trillion euros at the end of June 2026, equivalent to 119 percent of gross domestic product. The figure marks the highest debt ratio recorded in the country since the aftermath of the Second World War and reinforces concerns about the sustainability of French public finances.
Debt increased by 59.6 billion euros during the second quarter after already rising by 75.8 billion euros in the first three months of the year. At the end of March, the debt ratio stood at 117.5 percent of GDP. The latest increase was driven primarily by central government and social security liabilities, while local government debt declined.
The trajectory is becoming more difficult because France is no longer operating in the ultra low interest rate environment that characterized much of the previous decade. The government is expected to spend around 79 billion euros on debt interest in 2026. That cost is projected to rise to roughly 91 billion euros in 2027, increasing pressure on spending decisions across the rest of the national budget.
Financial markets are also demanding a higher return for holding French sovereign debt. Yields on ten year government borrowing have approached 5 percent, levels not seen since the global financial crisis. Higher yields do not immediately reprice the entire debt stock, but they progressively increase financing costs as bonds mature and new borrowing replaces older debt.
The government has warned that public debt could reach 121.7 percent of GDP in 2027, more than twice the European Union’s 60 percent reference threshold. At the same time, the 2027 budget is expected to target a reduction in the public deficit to 5 percent of GDP. Achieving that objective would still leave France well above European fiscal norms.
The political calendar complicates the adjustment. Presidential elections in 2027 increase pressure on parties and governments to balance fiscal consolidation against public resistance to spending cuts, tax increases and structural reforms. That tension makes debt management not only an economic issue, but also a central political challenge.
France is therefore confronting a double constraint. Its debt burden is rising while the cost of servicing that debt is becoming more expensive. The result is a narrowing fiscal margin in which every additional euro devoted to interest reduces the resources available for public investment, social spending or crisis response.
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