Amid protests, France's rising debt costs threaten stability
France plans to spend an extra €4 billion on education amid nationwide protests. But with public debt mounting and interest costs climbing, how much fiscal room does the government have?
France is grappling with rising debt costs amid nationwide protests. The government plans to spend €4 billion on school renovations by 2030 and €1 billion on universities by 2029, but it lacks the necessary funds. France's public debt is 120% of GDP, whereas Germany's is around 65%. France's debt rating is lower than Germany's, leading to higher borrowing costs.
The spread over German government bonds, which indicates bond market sentiment, is at its highest since the financial crisis. This spread, which acts as a 'fever gauge' for bond markets, could trigger a financial crisis if it rises sharply. French people may be unaware of the debt's consequences, as many receive more in government benefits than they pay in taxes.
The situation has worsened since June 2026, with the spread over German bonds more than doubling. France is projected to pay over €79 billion in interest on its public debt in 2026 and potentially between €125 billion and €132 billion by 2030. This increases the strain on the national budget.
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