France’s debt, taxes and borrowing costs rise as economic growth slows
France is facing mounting pressure on two fronts: growing public anger over the cost of living and an economy struggling with high debt, taxes and weak growth. Student protests that began with school blockades have spread, turning violent, putting the spotlight on the country’s economic troubles and deepening political tensions.The rising cost of living is one of the concerns behind the demonstrations, which began largely peacefully but disrupted schools before escalating into wider unrest and pockets of violence involving young people on Saturday. The issue is not unique to France, but it comes at a difficult time for the country’s economy.France is also struggling to bring its public finances under control. Carsten Brzeski, global chief of macro at ING bank, said “France is not Greece”, referring to the financial crisis that shook the European Union in 2009.
However, France has repeatedly failed to meet its targets for spending, economic growth and cost-cutting.With President Emmanuel Macron nearing the end of his nearly decade-long tenure, the state of the country’s finances is also expected to be a key issue in the race to succeed him next spring.
France’s nears 122% of GDP
France’s public debt stood at nearly 3.6 trillion euros (nearly $4.08 trillion) at the end of June, equivalent to 119% of its gross domestic product (GDP).
The government has warned that the figure could rise further. Three weeks ago, it said the budget would again exceed European Union spending limits, with public debt expected to reach nearly 122% of GDP, setting a new record, AP reported.The growing debt leaves the government with difficult choices. It needs to reduce spending or raise taxes, which are already among the highest in Europe.Gilbert Cette, an economics professor at Neoma Business School in Paris, described the debt as “enormous”, saying, “France’s entire economic policy is constrained by such a sizable debt level.”Cette said France had shown “talent” in both increasing government spending and cutting taxes in recent years, making it harder to get public finances back on track.Brzeski also warned that France’s approach to economic reforms was affecting its credibility. Writing last week, he said, “Greece’s credibility was destroyed by false statistics; France’s is being eroded by false promises and the inability or unwillingness to start fiscal and structural reforms,”
Government spending accounts for 57.2% of GDP
High government spending is another challenge for France.
In 2025, public expenditure accounted for 57.2% of the country’s economic output, according to Eurostat, the European Union’s statistics agency. The EU average was just under 50%.A large share of this spending goes towards healthcare, pensions and subsidies for businesses. With government expenditure already making up such a large part of the economy, reducing it further would require difficult decisions.France also has one of the highest tax burdens in the European Union.
Tax revenue and social contributions accounted for 45.2% of GDP in 2024, putting the country a close second behind Denmark, according to Eurostat. The EU average was just over 40%.This leaves the government with limited room to raise taxes further to reduce the deficit. Cutting spending is another option, but it would mean making choices about areas that already account for a significant share of the economy.
France faces higher borrowing costs
The cost of borrowing is adding to the pressure on France’s public finances.
The yield on its 10-year government bond stood at 4.96% as of Tuesday.Higher bond yields mean the government has to pay more to borrow money. This can leave less room in the budget for other priorities, including pensions, education, healthcare, defence and social programmes.Germany, the European Union’s largest economy, faces lower borrowing costs. Its equivalent 10-year government bond, known as the Bund, had a yield of about 3.4%.The gap between French and German 10-year bond yields has widened, highlighting the difference in borrowing costs between the two countries. This adds to the challenges facing France as it tries to manage its debt and spending.
France’s growth forecast falls to 0.4%
France’s economic outlook remains weak. The International Monetary Fund has forecast growth of just 0.4% for the country this year, the lowest rate among developed economies.The forecast is well below the expected growth rates for both the global economy and advanced economies.
Global output is projected to grow by 3.1% this year, while advanced economies are expected to expand by 2.1%.France’s projected growth is around one-third of Germany’s forecast rate and half of Italy’s. Japan, which has the second-lowest growth forecast among developed countries, is expected to grow by 0.7%.Slow growth makes it harder for France to manage its public finances while dealing with high debt, substantial government spending and an already heavy tax burden.
Rising borrowing costs further add to the pressure.With the economy growing slowly and public finances under strain, France faces difficult choices over how to control its debt and spending. These economic challenges are unfolding alongside political divisions and protests over the cost of living, while the state of public finances is set to remain an important issue ahead of next spring’s presidential succession race.