"Debt is our enemy." In 2007, François Bayrou made this the central theme of his unsuccessful campaign for the Elysée. Seventeen years later, the enemy has still not been vanquished. On the contrary, the new prime minister has arrived in the post to find the enemy stockier, stronger and more threatening than ever. From €1.2 trillion in 2007, French public debt rose to €3.3 trillion by the end of the third quarter of 2024, or 113.7% of gross domestic product (GDP), according to figures unveiled on Friday, December 20 by the French National Institute for Statistics and Economic Studies (INSEE). And there's more to come.
Having risen by €71.7 billion in three months, the total debt of the state, local authorities and social security is set to continue rising for at least the next five years, according to Moody's latest analysis of the situation in France, released on Wednesday. It should represent 120% of GDP in 2027. It is only in 2030 that it may be able to begin its descent, said the American rating agency. This is due to France's chronic inability to tighten its purse strings, a phenomenon amplified by the current political crisis.
In 2025, it's certain that the debt will continue to grow. In the draft budget that was not adopted, the state had planned to spend around €140 billion more than it expected to collect in revenue. The ongoing absence of a budget, which has been replaced for at least a few months by the minimalist "special law" adopted on Wednesday to extend current expenditure, can only increase this gap, in the absence of proactive measures to raise taxes or curb public spending. Not to mention the bill for Cyclone Chino, which devastated Mayotte on December 14, "probably the most serious natural disaster in French history for several centuries," according to Bayrou.
Far from returning to 5% of GDP as hoped, the public deficit is likely to settle between 5.5% and 7%, according to various projections, which will require borrowing even more substantial sums. As it stands, "our program calls for issues of €300 billion in 2025," said Antoine Deruennes on Thursday, the director general of Agence France Trésor, responsible for selling French debt to investors. That's €15 billion more than in 2024. "We're starting as early as Monday, January 6," he said.
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