France’s debt level will continue to increase to reach 119.3% of gross domestic product (GDP) in 2026 and 121.7% in 2027, the Ministry of the Economy and Finance indicated on Saturday September 19.
These debt levels are at their highest since 1995, according to data from the National Institute of Statistics (Insee). In 2025, debt represented 115.6% of national wealth created.
“This increase is mechanical. It is the consequence of a deficit which remains high”, explained the ministry to journalists, after having submitted the budgetary texts for 2027 during the night to the High Council of Public Finances (HCFP), which must decide on “the sincerity and credibility” of the macroeconomic trajectories.
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After 5.1% of GDP in 2025, the government forecasts a public deficit of 5.4% in 2026. It would decrease to 5% in 2027, an objective that the Minister of Economy and Finance Roland Lescure judged, Thursday, “ambitious” but “obviously achievable”.
“The prospect of a stabilization of this (debt) ratio can only occur when the public deficit is reduced to 3%” of GDP, an objective maintained for 2029, Bercy also specified.
France is the most indebted country in the euro zone behind Greece and Italy. For comparison, Spain’s public debt fell below 100% of GDP in July and Portugal’s was below 90% in 2025.
The thorny question of retirees
Prime Minister Sébastien Lecornu presented on Thursday the broad outlines of a budget for 2027 which he wants to be “offensive” with a massive effort of 54 billion euros, however leaving it to Parliament to decide on certain measures such as those, sensitive, concerning retirees.
The government has refined its budgetary savings plans for retirees, planning to lower the ceiling of the tax reduction from which they benefit to 3,000 euros while freezing or under-indexing certain pensions, according to a source within the executive on Saturday.
Currently, retirees can deduct 10% of their annual income from the taxable amount, up to a limit of 4,439 euros. A reduction to 3,000 euros of this limit would bring in 1.4 billion euros in additional tax revenue, according to this source, which recalls that the “subject” on the effort to be asked of retirees is “so hard electorally”.
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Presentation on October 1st
The draft budgets for the State and Social Security will be presented to the Council of Ministers on October 1, before their examination in Parliament. Consultation for the opinion of the HCFP is mandatory.
In addition to the debt and deficit targets, this body attached to the Court of Auditors will also examine the evolution of public spending.
The latter will drop slightly by 0.2 percentage points to 56.9% of GDP in 2027, according to the Ministry of the Economy, which sees this as “the fruit of a very considerable effort to control spending”. This effort concerns the State (excluding defense), social security and local authorities.
An indicator monitored at European level, net primary expenditure (NPD), which excludes the debt burden and cyclical expenditure linked to unemployment, will increase by 0.7% in 2027, under the Brussels recommendation (1.2%).
In 2026, the DPN will however increase by 1.4%, a rate “slightly higher than the recommendation, but within the margin of flexibility authorized by the European Union”, according to Bercy.
Regarding revenue, the compulsory tax rate will reach 44.2% of GDP next year, compared to 43.9% in 2026, a slight increase attributed to the reduction of certain tax loopholes and the fight against fraud.
“But overall, no generalized tax increase, no VAT increase, no freezing of the IR scale (income tax, Editor’s note),” Bercy underlined. The surcharge on the profits of large companies will fall and would only bring in 5 billion euros per year instead of around 8 billion.
With AFP
