Stories
France's Record Debt: A Defining Issue for the Upcoming Presidential Election
- •France's public debt has reached a record 119% of GDP, becoming a central issue for the upcoming presidential election and unsettling investors.
- •Candidates are pressured to present plans for debt control, with Prime Minister Sebastien Lecornu proposing spending cuts, facing widespread criticism.
- •Radical-left candidate Jean-Luc Mélenchon suggests canceling French government bonds held by the ECB, a proposal ECB President Christine Lagarde calls a "pure violation" of EU treaties.
- •France's debt stood at 3.596 trillion euros ($4.08 trillion) at the end of June, significantly higher than its 97.9% of GDP in 2019 before the pandemic.
- •The rising debt means increased expenditure on debt service, projected to reach 77 billion euros annually, diverting funds from essential public services.
Key Questions Answered
France's public debt has climbed to 119 percent of gross domestic product, reaching 3.596 trillion euros by the end of June. Finance ministry sources indicate public debt is projected to hit 119.3 percent in 2026 and 121.7 percent in 2027.
Radical-left presidential candidate Jean-Luc Mélenchon has proposed freezing or cancelling French government bonds held by the European Central Bank and the Bank of France to unlock money for public spending. ECB President Christine Lagarde criticized the idea as a pure violation of EU treaties that ban central bank financing of national governments.
France last balanced its budget in 1973, and expenditure has continuously exceeded revenue. The debt escalated further due to heavy government spending on subsidies during the COVID-19 pandemic and the subsequent energy crisis triggered by Russia's invasion of Ukraine.
