French Debt Heads for Record, €54bn in Cuts Planned

France's public debt is projected to rise to a record 119.3% of GDP in 2026 and to 121.7% in 2027, according to a forecast by the French ministry of finance. As recently as 2019, the debt was below 100% of GDP, and last year it reached 115.7%.

The ministry also expects the budget deficit to reach 5.4% of GDP this year.

Prime Minister Sebastien Lecornu plans to include austerity measures totaling €54bn ($62bn) in the 2027 budget to prevent the deficit from growing further.

However, pushing through these cuts may prove challenging given the divided parliament and growing public dissatisfaction with the high cost of living.

Investors' concerns about France's public finances are also reflected in the bond markets, where the spread between French and German borrowing costs exceeded one percentage point on Friday for the first time since the eurozone debt crisis.

(Reuters, est)