French debt reaches 119% of GDP as state plans €340 billion borrowing in 2027

Record debt and borrowing plans

France's public debt reached €3,595.5 billion in the second quarter of 2026, according to figures released on Tuesday, September 29, by the national statistics office INSEE. The total represents 119% of gross domestic product, reaching its highest level in proportion to national output since 1946. In response to state financing needs, Agence France Trésor announced that the government's borrowing program will require €339.7 billion in medium and long-term bond issuance in 2027. This borrowing plan represents an increase of €28 billion compared to the funding level required in 2026. The timing of the announcement diverged from past practice, when Agence France Trésor typically unveiled its funding strategy on the day of the budget presentation, because long-term bond auctions for maturities spanning 2036 to 2048 are scheduled for Thursday.

Rising interest rates and market pressure

Borrowing costs for the French state have increased consistently following the dissolution of the National Assembly in 2024. French sovereign bond yields have risen above 4.5%, reaching levels not seen since the 2008 financial crisis. International credit rating agencies have also downgraded French sovereign ratings from AA to A+ following the pandemic. Financial analysts attribute the higher yields to heightened political uncertainty, prospective motions of no confidence during budget debates, and the upcoming 2027 presidential election. Andréa Tueni, head of market activities at Saxo Banque, described the trajectory of French bond yields.

Since that moment, we have had a curve that is only pointing upwards. We are exceeding 4.5%. This is the highest since 2008, since the financial crisis.

Financial executives have expressed growing concern regarding public expenditure. Daniel Baal, president of Crédit Mutuel and CIC, criticized the scale of the state liabilities.

The level of French debt today is unacceptable.

Debt ownership and servicing expenses

French sovereign debt is divided equally between domestic and foreign investors, with 50% held inside France and 50% held abroad by institutions in neighboring European countries, the United States, and Japan. Domestic holdings are distributed among the Banque de France, retail commercial banks, and individual savers participating through euro-denominated life insurance funds. Alexis Trigaut, a partner at asset manager Corum, noted that retail investors still consider French government bonds to carry low risk.

Interest costs associated with the national debt are projected to become one of the largest expenditure lines in upcoming government budgets. France faces €77.4 billion in debt interest charges in 2026, with annual interest expenses projected to rise to €100 billion by 2030.

Public sector protests and budget timeline

The publication of the national debt data coincided with public labor actions over living conditions. On Tuesday, September 29, 2026, thousands of civil servants held street demonstrations to protest against declining purchasing power, which has been eroded by fuel costs. Public sector unions organized the rallies across French cities as workers faced increased everyday expenses. The debt figures were published just prior to the formal presentation of the 2027 draft budget, where lawmakers face pressure to implement fiscal consolidation as presidential contenders position themselves for the 2027 campaign.