France Faces Rising Debt and Budget Challenges Amid Political Uncertainty

As of late November 2025, France is grappling with significant financial and budgetary challenges, highlighted by intense parliamentary debates and growing concerns from economic authorities and the European Commission.

The French Parliament has yet to adopt the 2026 budget after weeks of deliberations, with the initial draft presented to the Senate on November 27. François Villeroy de Galhau, Governor of the Bank of France, warned of a "gradual suffocation" caused by rising public debt and stressed the urgency of passing a credible budget that targets reducing the deficit to 3% by 2029. Currently, France’s deficit is expected at 5.4% in 2025, and the government aims to bring it down to under 4.8% in next year's budget. Villeroy highlighted the dramatic increase in interest payments on debt, from 30 billion euros in 2020 to a projected over 100 billion euros by the end of the decade, limiting resources for key areas such as education, climate change, and defense.

Despite a modest 0.7% projected economic growth for 2025, uncertainties—both domestic political and international—are estimated to have shaved 0.5 percentage points from potential expansion. The ongoing failure to agree on the social security budget has added to the fiscal confusion.

Meanwhile, the European Commission’s autumn opinions reveal concern over France’s excessive deficit procedure status and the credibility of its budget execution. The Commission projects France’s deficit will be -5.8% of GDP in 2024, improving only slightly to -4.9% in 2026. The Commission evaluates France’s budget plans with a surprising leniency despite ongoing parliamentary uncertainties. Analysis also underlines France's unique economic position: although heavily indebted, it benefits from positive net investment income, which supports its consumption and public deficits but masks deeper fiscal vulnerabilities.

Governor Villeroy called for serious public debate on budgetary issues and urged political leaders to adopt a long-term vision beyond short-term considerations. He warned that without fiscal discipline, rising public debt costs could progressively stifle the country’s economic prospects. The complexity of balancing spending cuts and tax adjustments poses a formidable challenge ahead.

The situation remains fluid as Parliament deliberates, but the urgency for a credible budget and fiscal responsibility is clear from both national and European viewpoints.