France’s public debt reaches its highest level in 80 years as the country faces a fiscal crisis

France’s public debt rose to €3,595.5 billion at the end of June, representing 119% of gross domestic product. The data was published by the French statistics agency INSEE, which confirmed that this is the highest level recorded in the past 80 years.

Compared with March, public liabilities increased by €59.6 billion, or 2% in just one quarter. The new figure also exceeds the level recorded in the first quarter of 2021, when debt reached 117.8% of GDP and France, like other European countries, significantly increased spending to avoid an economic recession.

The French government’s latest projections show that debt could reach 119.3% of GDP by the end of this year, while it is forecast to rise to 121.7% in 2027.

The fiscal deterioration has also led to higher borrowing costs. Interest on 10-year bonds has reached 4.8%, while that on 30-year securities has risen to 5.3%, the highest level since 2003. France is currently financing itself at higher interest rates than Greece, Italy, Spain and Portugal, while Germany pays 3.65% on 10-year bonds.

This financial situation is being accompanied by growing political and social tensions. Civil servants began a strike today, while protests have been particularly large in the transport, healthcare and education sectors. At the same time, it is unclear whether the French National Assembly will secure the votes needed to approve the state budget for 2027.

France is already effectively in a pre-election phase, ahead of next spring’s presidential election and parliamentary elections that may follow. Under these circumstances, it remains highly uncertain whether the country will be able to approve the economic austerity measures over the next eight months, despite broad agreement that they are more necessary than ever.