{"id":3252,"date":"2026-01-08T18:02:00","date_gmt":"2026-01-08T18:02:00","guid":{"rendered":"https:\/\/trusteconomics.eu\/?p=3252"},"modified":"2026-01-08T18:02:00","modified_gmt":"2026-01-08T18:02:00","slug":"france-borrowing-mammoth-310-billion-euros-in-2026-with-emergency-measures-to-avoid-bankruptcy","status":"publish","type":"post","link":"https:\/\/trusteconomics.eu\/index.php\/2026\/01\/08\/france-borrowing-mammoth-310-billion-euros-in-2026-with-emergency-measures-to-avoid-bankruptcy\/","title":{"rendered":"France: Borrowing \u2013 mammoth 310 billion euros in 2026 with emergency measures to avoid bankruptcy"},"content":{"rendered":"\r\n\r\nThe French government plans to borrow a record 310 billion euros from the markets in 2026 \u2013 despite starting the year without a fully voted state budget but with emergency fiscal arrangements. The move underscores how unprecedented debt and persistent deficits are setting the stage for a full-blown crisis, combined with a fractured parliament and a president who has already turned his attention to high-stakes elections in 2027.\r\n\r\n \r\n\r\nAs a result of parliament\u2019s failure to pass the 2026 budget, the French government was forced to invoke emergency budget legislation, which extends the previous year\u2019s budget to continue funding the state when a new budget law is not adopted. The same kind of emergency legislation was used in the run-up to the 2025 budget, which was only finalized in February after being forced through parliament \u2014 a delay that cost the government $12 billion.\r\n\r\n \r\n\r\nBank of France Governor Francois Villeroy de Galhau has warned in a stern tone that carrying over the 2025 framework into 2026 would lead to \u201ca deficit much higher than desired\u201d \u2014 a warning that temporary solutions risk worsening France\u2019s economic situation.\r\n\r\n
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\"\"<\/figure>\r\n<\/div> \r\n\r\n \r\n\r\n \r\n

Why an extra \u20ac310 billion?<\/strong><\/p>\r\n \r\n\r\nAccording to the budget plan presented by the Finance Ministry to the government in October, France needs to raise just over \u20ac305 billion in 2026 \u2014 slightly more than in 2025 \u2014 to keep the state running and repay some of its existing debt. According to the financing plan presented earlier this week, this will be done by selling around \u20ac310 billion in government bonds \u2014 in other words, by borrowing from financial markets with a medium- and long-term horizon.\r\n\r\n \r\n\r\nThe additional borrowing is mainly due to more old loans maturing and the public debt having to be refinanced at a higher cost. Repayments of previous borrowing will rise from 168 billion euros in 2025 to almost 176 billion euros in 2026, while the annual gap between government spending and revenue \u2014 the budget deficit \u2014 is expected to reach around 124 billion euros. In addition, debt servicing costs are rising as higher interest rates are gradually passed on, partly as a result of France\u2019s credit rating downgrade.\r\n\r\n \r\n

Lower credit ratings<\/strong><\/p>\r\n \r\n\r\nParis is starting to feel the impact of downgrades and negative outlooks from the major rating agencies, which act as indicators for investors when they assess a country\u2019s debt. In recent years, Moody\u2019s, S&P and Fitch have warned that high and rising debt, political tensions over reforms and repeated fiscal slippages make France a riskier investment than in the past, even as it remains firmly within investment grade. Foreign investors hold more than half of France\u2019s tradable government debt, making the country more vulnerable to a shock to confidence and higher interest rates from markets.\r\n\r\n \r\n\r\nThe amount the state pays in interest alone is expected to rise from \u20ac52 billion in 2025 to more than \u20ac59 billion in 2026 \u2014 money that cannot be used for schools, hospitals or investment and that still does not reduce overall debt.\r\n\r\n \r\n

In the EU\u2019s \u201cblack books\u201d<\/strong><\/p>\r\n \r\n\r\nMeanwhile, at an impressive \u20ac3.2 trillion, France\u2019s public debt has risen from around 97.4% of GDP in 2019 to over 112% in 2023, placing the country among the most heavily indebted in the eurozone and well above the 60% limit set by the EU\u2019s Stability and Growth Pact.\r\n\r\n \r\n\r\nGermany\u2019s debt, by contrast, stands at around 62% of GDP, almost half that of France, while the eurozone average is below 90%. Deficits have also widened.\r\n\r\n \r\n\r\nFrance went from a central government deficit of 2.1% of GDP in 2019 to around 4.9% in 2023 and remains in a primary deficit, meaning it continues to borrow even before interest payments \u2014 unlike Germany, which has moved much closer to balance. France is now the third most indebted EU member state, after Greece and Italy, and is facing renewed pressure from the EU as fiscal rules are gradually reinstated.\r\n\r\n

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\"\"<\/figure>\r\n<\/div> \r\n\r\n \r\n\r\n \r\n

In the EU\u2019s \u201cblack books\u201d<\/strong><\/p>\r\n \r\n\r\nMeanwhile, at an impressive \u20ac3.2 trillion, France\u2019s public debt has risen from around 97.4% of GDP in 2019 to over 112% in 2023, placing the country among the most heavily indebted in the eurozone and well above the 60% limit set by the EU\u2019s Stability and Growth Pact.\r\n\r\n \r\n\r\nGermany\u2019s debt, by contrast, stands at around 62% of GDP, almost half that of France, while the eurozone average is below 90%. Deficits have also widened.\r\n\r\n \r\n\r\nFrance went from a central government deficit of 2.1% of GDP in 2019 to around 4.9% in 2023 and remains in a primary deficit, meaning it continues to borrow even before interest payments \u2014 unlike Germany, which has moved much closer to balance. France is now the third most indebted EU member state, after Greece and Italy, and is facing renewed pressure from the EU as fiscal rules are gradually reinstated.\r\n\r\n \r\n

Looking ahead to the 2027 presidential election<\/strong><\/p>\r\n \r\n\r\nFrance\u2019s fiscal impasse follows an extremely turbulent political period, during which Macron has changed five prime ministers in his second term. It reflects the difficulties of governing with a parliament caught between competing blocs, without a clear majority. Current Prime Minister S\u00e9bastien Lecornu remains under intense pressure from the president to secure the 2026 budget, while at the same time facing threats of no-confidence motions from both the left and the right.\r\n\r\n \r\n\r\nPolitical opponents are expected to exploit the fiscal crisis and Macron\u2019s \u201clame duck\u201d position ahead of the 2027 presidential election, presenting the debt and budget situation as a failure of his centrist movement.\r\n\r\n \r\n\r\nThe National Rally is likely to blame what it sees as excessive spending and ties to Brussels, while pledging to curb immigration and benefits but protect pensions.\r\n\r\n \r\n\r\nMeanwhile, the left-wing New Popular Front is expected to attack austerity measures and push for new taxes on wealth to finance social spending. Macron\u2019s center-right allies, such as \u00c9douard Philippe, are likely to demand fiscal discipline through pension cuts and spending caps, as all sides capitalize on the rotation of prime ministers and institutional distrust to boost their poll ratings.\r\n\r\n \r\n\r\nThe lower house of parliament will resume consideration of a full budget bill in the coming weeks, with debates expected to resume on January 13. Both houses must agree on the text before it becomes final.\r\n\r\n \r\n\r\nFrance appears unable to politically manage the fiscal misstep and risks being the first act of a full-blown Eurozone debt crisis.\r\n\r\n","protected":false},"excerpt":{"rendered":"

The French government plans to borrow a record 310 billion euros from the markets in 2026 \u2013 despite starting the year without a fully voted state budget but with emergency fiscal arrangements. The move underscores how unprecedented debt and persistent deficits are setting the stage for a full-blown crisis, combined with a fractured parliament and … <\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[19],"tags":[138,848,1107,237,1109,72,709,1108],"class_list":["post-3252","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bonds","tag-borrowing-costs","tag-budget","tag-economy","tag-emmanuel-macron","tag-eurozone","tag-france","tag-lecornu"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/3252","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/comments?post=3252"}],"version-history":[{"count":1,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/3252\/revisions"}],"predecessor-version":[{"id":3253,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/posts\/3252\/revisions\/3253"}],"wp:attachment":[{"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/media?parent=3252"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/categories?post=3252"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/trusteconomics.eu\/index.php\/wp-json\/wp\/v2\/tags?post=3252"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}