France Faces Rising Public Debt and Fiscal Risks as Deficit Approaches Critical Threshold

France is confronting significant economic challenges as its public debt soars to unprecedented levels and concerns about fiscal deficit intensify. According to the National Institute of Statistics and Economic Studies (Insee), France's public debt has surged to 3.482 trillion euros, representing 117.4% of its GDP—a record high outside of wartime or pandemic conditions. Analysts caution that without corrective measures, this swelling debt could trigger a financial market crisis.

Adding to these concerns, François Villeroy de Galhau, governor of the Banque de France, has issued a stark warning regarding the escalating deficit. He emphasized that if France’s budget deficit surpasses 5% of its GDP, the country would place itself "in danger," urging parliamentarians to uphold fiscal responsibility. This warning comes amid parliamentary budget discussions that have deviated from the government's initial deficit target of 4.7%.

Despite these fiscal challenges, the Banque de France has revised its economic growth projections upwards, forecasting GDP growth of 0.9% for 2025, up from a previous estimate of 0.7%. Growth is expected to accelerate to 1.1% in 2028, supported by a rebound in household consumption and private investment replacing earlier growth drivers such as public orders and foreign trade.

The dual pressures of escalating debt and potential budget deficits beyond critical limits underscore the urgency for France to implement sound fiscal policies to avoid economic instability. As Villeroy de Galhau succinctly put it, exceeding a 5% deficit would expose the nation to serious danger, highlighting the precarious balance between fostering growth and maintaining fiscal discipline.