France’s debt burden grows as budget crisis deepens further

France's public debt has reached a record high during Emmanuel Macron's two terms as president, causing concern among investors and becoming a key issue in next year's presidential election. With the country already facing social tensions, candidates vying to succeed Macron must address how they will control the debt. France's debt now stands at 119% of its gross domestic product, and despite a proposed 54 billion euro ($61 billion) spending reduction, it is unlikely to balance its annual state budget next year.

The government announced that the budget will exceed EU limits, and the national debt is expected to grow to nearly 122% of GDP, another record.

Budget minister David Amiel believes the spending cuts are crucial, but the proposal has been met with skepticism. Radical-left presidential candidate Jean-Luc Melenchon suggested canceling government bonds held by the European Central Bank to free up funds for public spending, claiming it would be equivalent to canceling the debt.

However, ECB President Christine Lagarde warned that this idea would violate EU treaty rules. Melenchon's idea is seen as unrealistic by the far-right leader Marine Le Pen, who advocates for reforms to "clean up" public finances. Lagarde emphasized that freezing debt now would make it difficult to borrow in the future, with creditors potentially demanding unfavorable terms or rejecting the request altogether.

France remains a significant industrial power and the seventh-largest economy globally. However, its public debt, which stood at 3.596 trillion euros ($4.08 trillion) at the end of June, equivalent to 119% of GDP, is a pressing issue. The country is not alone in accumulating debt, as the euro area's general government gross debt-to-GDP ratio stood at 88.9% by the first quarter of 2026.

While France's debt is smaller than Greece's (143.5% of GDP) and Italy's (138.9% of GDP), it is still higher than the US's (122.6% of GDP), despite the US benefiting from having the world's dominant reserve currency.

Every year, France prepares a budget, primarily funded by taxes and levies from individuals and businesses. Expenditure covers public services such as education, justice, and policing. For the past 50 years, expenditure has surpassed revenue, leading to a budget deficit, which France has financed by taking out loans. The total value of these loans constitutes France's public debt.

Despite France's history of high deficits, the country has maintained a robust welfare state with strong worker protections. However, recent challenges, including the pandemic and energy crisis, have led to increased government spending and a significant rise in public debt from 98% of GDP in 2019 to 114% in 2020.