France Debt Set to Hit Record High

France’s public debt is expected to reach its highest level since 1995 this year, driven by a persistently high budget deficit, the country’s Finance Ministry said Saturday.

Public debt is forecast to rise to 119.3% of gross domestic product (GDP) in 2026 and 121.7% in 2027, according to a ministry source. Both figures are almost twice the European Union’s reference limit of 60% of GDP for member states.

The projected debt levels would be records under the methodology used by France’s national statistics agency INSEE since late 1995.

The ministry source said the increase was “automatic” and resulted from a budget deficit that remained high.

Under EU fiscal rules, member states are expected to keep their public deficit — the gap between government revenue and spending — below 3% of GDP.

France recorded a deficit equivalent to 5.1% of GDP last year, while the government expects it to rise to 5.4% this year. The deficit is forecast to fall to 5% in 2027.

France has been under special EU monitoring for the past two years because of its elevated deficit levels.

The government has submitted its draft 2027 budget measures to the High Council of Public Finances, an independent fiscal watchdog, for an assessment of their macroeconomic viability.

Prime Minister Sebastian Lecornu said Thursday that the government planned adjustments and spending cuts worth €54 billion ($62 billion) in the 2027 budget.

However, with presidential and parliamentary elections approaching, some politically sensitive measures have been left for parliament to decide. These include a government proposal to reduce tax breaks available to pensioners.

The French economy has been slowing since the third quarter of last year, amid weak consumer spending and a recent surge in energy prices linked to the US-Israeli war against Iran.