Deficit at its highest level since 1978: France's debt grows to record levels

France’s public debt is approaching its highest level since 1978, according to government figures released this week. The French finance ministry confirmed that public debt will reach 119.3 percent of gross domestic product (GDP) in 2026 and 121.7 percent in 2027. This would mark the highest level since data began being recorded in 1978, according to the French National Institute for Statistics and Economic Studies (Insee). The increase follows years of persistent budget deficits. In 2025, public debt stood at 115.6 percent of GDP, and the government projects a deficit of 5.4 percent of GDP in 2026, down slightly to 5 percent in 2027. These figures exceed the European Union’s recommended limit of three percent of GDP for annual deficits. The finance ministry described the rise in debt as “mechanical,” driven by continued high levels of deficit spending. According to the finance ministry, the government has submitted draft budgets for 2027 to the High Council for Public Finance, which will assess the credibility of the proposed economic trajectory. The government aims to reduce the deficit to three percent of GDP by 2029, though achieving this goal remains uncertain. France is the third-most indebted country in the eurozone, behind Greece and Italy. Spain’s public debt fell below 100 percent of GDP in July, while Portugal brought its debt under 90 percent of GDP in 2025. The eurozone’s debt ceiling is set at 60 percent of GDP, and France’s current level exceeds this threshold more than twice over. To address rising debt, the government plans to implement savings of €54 billion in 2027. Prime Minister Sebastien Lecornu outlined ambitious measures in his proposed 2027 budget, including reducing the tax exemption cap for retirees from €4,439 to €3,000 annually. This change could generate an additional €1.4 billion in revenue. However, some adjustments, particularly those affecting retirees, are expected to be debated further by Parliament. Finance Minister Roland Lescure recently called the target of a five percent deficit in 2027 “ambitious” but “clearly achievable.” The government has refined its cost-saving strategies, focusing on pension reforms and fiscal adjustments aimed at reducing the overall burden on public finances. The eurozone’s debt limits were established to ensure sound fiscal policies among member states. While the currency is shared, individual countries retain control over their fiscal policies. This arrangement was designed to prevent excessive borrowing that might threaten the stability of the entire euro area, as seen during the sovereign debt crisis beginning in 2010.