Prime Minister Michel Barnier has made it a government priority to rein in the French state’s finances, calling the situation “extremely serious” only days after coming to office. Here is how France’s public debt compares to that of its European neighbours.
The new government has proposed tax hikes and spending cuts in its 2025 budget in response to France’s high deficit and ballooning public debt.
“When I arrived at Matignon [the PM’s residence], I found a very serious situation, much more severe than I had been led to believe,” said Prime Minister Michel Barnier in an interview with Journal de Saône-et-Loire, on September 27.
“The public deficit is now over 6% of gross domestic product, a far cry from the 4.4% initially targeted for 2024.”
He added that the debt accumulated as a result of past deficits had reached a new record of €3,228 billion by the end of June, almost €1,000 billion more than the figure when Emmanuel Macron took office in 2017, according to INSEE figures of September 27.
France, as an EU member state, has agreed to meet a 3% deficit ratio and a 60% debt ratio under the European Stability and Growth Pact.
Failure to adhere to these levels could result in the European Commission placing France under the EU’s excessive deficit procedure (EDP), which would force the country to make drastic cuts and cause massive disruption to France’s social model.
The EDP could even fine France up to 0.05% of the previous year’s GDP.
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Since Brexit, the UK, which has a public debt at 98% of GDP and a deficit at 4%, is no longer assessed by the European Stability and Growth Pact.
So far, France has avoided referral to the EDP, but with both of its public debt and deficit levels far above the accepted thresholds - and rising in 2024 - former EU negotiator Michel Barnier knows that the worst-case scenario is a real possibility.
