France to Borrow Record €310 Billion in 2026 Despite Budget Absence

France is poised to undertake a historic borrowing operation in 2026, issuing a record €310 billion in public debt, despite having no approved budget for the year. The Agence France Trésor (AFT) announced on December 30 that this unprecedented borrowing will begin as early as January 2026, enabled by a special law recently enacted by President Emmanuel Macron to ensure government financing continuity.

This €310 billion financing program covers new medium and long-term government bonds, net of early debt buybacks, and corresponds to about 10% of France's GDP—a ratio consistent with 2025 levels. Despite the absence of a formal budget, this plan marks an increase from the €300 billion net borrowing in 2025 and €285 billion in 2024, reflecting ongoing fiscal pressures.

The government's public debt reached an all-time high of nearly €3.5 trillion by the third quarter of 2025. Borrowing costs have also risen, with the average interest rate climbing from 2.91% in 2024 to 3.14% in 2025. Similarly, the ten-year government bond yield soared from 2.94% to 3.37%. Analysts attribute the increase partly to Europe's broader interest rate hike, notably Germany's significant debt issuance to fund an investment plan, as well as France's political instability pushing risk premiums higher.

To prevent administrative paralysis amid these financial challenges, the French government issued a decree accompanying the special law. This decree aims to ensure public services are adequately funded, even though it does not resolve the overall ambiguity surrounding the 2026 budget.

With the legal framework facilitating borrowing ahead of a formal budget, the precise volume of debt issuance could still be adjusted depending on the provisions of the finance law for 2026 once finalized. For now, France prepares to navigate its largest-ever sovereign debt issuance to maintain public financing amid uncertain fiscal governance.