France’s public debt further swelled in the third quarter, standing at 113.7% of gross domestic product (GDP) at the end of September compared to 112.2% at the end of June, indicated this Friday, December 20 INSEE. From July to September, the debt increased by 71.7 billion euros, to reach 3,303 billion euros, said the National Institute of Statistics. In the previous quarter, the increase was +69 billion.
The increase in public administration debt is mainly due to the State, whose debt increases by 59.8 billion euros, to 2,690.5 billion after + 70 billion in the previous quarter. That of various central administration bodies (ODAC), described as “stable” by INSEE, nevertheless increased by 200 million euros to 69.4 billion. The debt of social security administrations also increases (+10.4 billion after +4 billion), to 290.8 billion, as well as that of local authorities (+1.3 billion euros to 252.2 billion), then that it had fallen by 300 million in the second quarter.
120% public debt in 2027?
French public debt, which remained confined between 60% and 70% of GDP at the start of the 2000s, experienced a first surge after the 2008 crisis, stabilized around 100% at the end of the 2010s, before a second dazzling restart due to massive “whatever it takes” spending linked to the Covid health crisis.
And the trend is not expected to reverse for a few years. The previous government’s medium-term budget plan, covering the period 2025-2029 and aiming to reduce France’s public deficit to 2.8% of GDP in 2029, thus anticipated a public debt reaching 114.7% of GDP. in 2025. According to this document, the debt would increase to 116.5% in 2027, before falling to 115.8% in 2029. At the same time, growth would be 1.1% in 2025 (identical to this year), 1.4% in 2026, and 1.5% in 2027 as in 2028. Forecasts considered “a little optimistic” by the High Council of Public Finances (HCFP) on October 10.
For its part, the rating agency Moody’s, which lowered France’s sovereign rating by a notch last week – a surprise because it did so outside of its half-yearly calendar – in order to take into account the new uncertainties linked to the censorship of Michel Barnier’s government, is hardly optimistic. According to her, public debt would increase from 113.3% of GDP in 2024 to around 120% in 2027. “If debt capacity has long been a relative asset of France in terms of credit, this asset erodes compared to similarly rated peers,” observes Moody’s.
“It would be wrong to forget the deficit and the debt […] otherwise they will abruptly remind us all”, warned Michel Barnier when giving up his place at Matignon to François Bayrou. “No one knows the difficulty of the situation more than me”, the latter replied. In 2007, the man who is now Prime Minister made the debt his “enemy” during his campaign for the presidential election, 17 years later, this adversary is still there, even more threatening than before.