French public debt rose again in the second quarter, reaching the unprecedented level of 3,595.5 billion euros at the end of June, the National Institute of Statistics and Economic Studies (Insee) announced on Tuesday 29 September.
Measured against overall economic activity, France’s debt also hit a historic high, at 119% of gross domestic product (GDP). You have to go back to 1946 to find a public debt ratio that high. France was then tending to the wounds of the Second World War.
Between the end of the first quarter of 2026 and the end of the second, the debt increased by 59.6 billion euros, after already rising by 75.8 billion in the first quarter, when it stood at 117.5% of GDP.
More specifically, central government debt and that of the social security system rose in the second quarter, while the debt of local authorities fell.
Earlier this month, the government warned that public debt would reach 121.7% of GDP in 2027, more than double the European ceiling set at 60%, a level not seen since Insee began compiling this statistic in 1978.
Rising cost of debt servicing
When interest rates were low, or even negative as during the Covid-19 period in 2020 and 2021, taking on debt could seem like a good deal.
But since then, the swelling of the debt combined with soaring rates has had very concrete consequences: every year, France has to pay increasingly large sums to its creditors, around 79 billion euros in 2026.
In recent weeks, conditions on the financial markets have deteriorated sharply. This is particularly true for France: investors now demand interest rates close to 5% to lend to the state over ten years. That has not been seen since 2008 and the global subprime financial crisis.
Direct consequence: a sharp rise in interest payments over the coming years. For 2027, the government expects the cost of servicing the debt to increase further, to 91 billion euros.
The headache of the 2027 budget
The growing burden of debt servicing partly explains the current deterioration in the public finances. It also makes drawing up the draft budget bill for 2027, due to be presented on 1 October, considerably more complicated. The text prepared by Sébastien Lecornu and his government aims to bring the public deficit down to 5% of GDP, a year later than previously planned.
There is, however, a strong risk that this already modest target will not be met, because of the presidential campaign. According to many economists, that electoral deadline freezes any possibility of structural reform.
Finally, if interest rates continue to rise and increase the cost of debt in the state budget, the draft budget law soon to be put before MPs will have only limited real significance.