France’s public debt continued to swell at the end of June, flirting with 3,230 billion euros, at 112% of GDP, up compared to the end of March (110.5% of GDP), announced this Friday September 27 the National Institute of Statistics (Insee). This is a new indication of the sharp deterioration of public finances two weeks before the presentation of a high-risk 2025 budget project for the government.
In detail, the debt increased by 175.2 billion euros in one year and by 842.3 billion euros since the end of 2019, when it still weighed less than 100% of GDP. This is very far from the maximum of 60% of GDP set by European budgetary rules. However, other countries on the continent have managed to better control their debt.
France, a bad student in Europe
In the eurozone in the first quarter of 2024, public debt averaged 88.7% of GDP, according to the latest Eurostat data, and 82% in the European Union as a whole. With 112%, France is therefore well above. Only Greece and Italy are in a worse position, with debt reaching 159.8% and 137.7% of GDP respectively in the first quarter (110.8% in France at the same time).
But these two countries have, comparatively, been much more successful in reducing their debt than France in recent years. Greece’s debt was thus 190.5% in the first quarter of 2022, and that of Italy was 148.3%. The French debt stood at 114.2% of GDP. The decrease is therefore much smaller for France. The European states whose debt/GDP ratio has decreased the most in two years are, after Greece, Portugal, Cyprus and Croatia. France is very far behind.
If we look at our close neighbors, Spain and Portugal, which come in fourth and sixth position just behind France in the ranking of countries with the greatest public debt as a percentage of GDP, have seen it decrease by 7 points for the first and 23 points for the second between the first quarter of 2022 and that of 2024.
Germany, for its part, is in debt to the tune of 63.4% of its GDP, barely more than the maximum set by European rules, even though French growth is holding up much better than that of its neighboring country. across the Rhine, that the unemployment rate is at its lowest and that inflation has slowed sharply to 1.2% year-on-year in September. To explain these poor results, the Minister of the Economy, Antoine Armand, affirmed that the French debt was “the combined result of 50 years of public deficit” before the Finance Committee of the National Assembly. The new government of Prime Minister Michel Barnier has committed to presenting during “the week of October 9” its draft budget for 2025, which will mainly be placed under the sign of cuts in public spending in an attempt to redress the situation.
Still, the alarm signals are multiplying: the rate at which France borrows for ten years, a benchmark for investors, rose above that of Spain on Thursday for the first time in almost eighteen years on the market where investors exchange debt already issued. This shift is a sign that investors consider it safer to hold Spanish debt than French debt. As a result, concerns about a potential attack on the markets are resurfacing, as during the euro zone crisis.