French debt set to rise to a record 121.7 percent of GDP. Government wants to freeze housing benefits for 5.7 million households

The French Ministry of Economy and Finance announced on Saturday that the country's public debt will reach 119.3 percent of gross domestic product in 2026 and rise to 121.7 percent in 2027. These are the highest levels since 1995, according to data from the statistical office Insee. The ceiling agreed upon by eurozone countries is 60 percent. In 2027, France will thus exceed it by more than double. "This growth is mechanical. It is the result of a deficit that remains high," the ministry explained to journalists. Le Figaro ↗ France 24 ↗ n-tv ↗

The government submitted the budget texts for 2027 overnight on Saturday to the High Council for Public Finance, which is to give its opinion on their credibility. It is to present them to the Council of Ministers on October 1. Under the plan, the deficit is to fall from 5.4 percent of GDP in 2026 to 5 percent in 2027, and France wants to reach the three-percent threshold only by 2029. France 24 ↗ Le Monde ↗

Who will pay for it

Prime Minister Sébastien Lecornu announced the 54-billion-euro savings package on Thursday, September 17. On Saturday, the minister for cities and housing, Vincent Jeanbrun, clarified one of the items: housing benefits, received by approximately 5.7 million households, will not be adjusted for inflation next year. "We are asking for a small effort from everyone," he said. Le Figaro ↗ Le Monde ↗

Pensioners are also expected to contribute. The government wants to lower the ceiling on the tax deduction from 4,439 to 3,000 euros, which is expected to bring in 1.4 billion euros, and to freeze some pensions or adjust them below the rate of inflation. At the same time, the ministry claims this is not an across-the-board tax increase, and that it does not plan to raise VAT or freeze income tax brackets. Le Monde, however, points out that the main factor behind the expected reduction in the deficit will be a further increase in mandatory contributions. France 24 ↗ Le Monde ↗

So far, these are only proposals. The budget law must pass through parliament, where the government does not have a majority, and lawmakers can amend it. Le Monde ↗

Paris and Madrid are at the same level with one agency

A day before the forecast was published, on Friday, September 18, the German agency Scope Ratings downgraded France's debt rating from AA- to A+. At the same time, it improved the outlook from negative to stable. According to its statement, the reason is "a persistent deterioration in budgetary prospects," with rising public debt, still-high deficits, and limited progress on structural reforms. The agency also pointed out that the government is struggling to meet its own deficit targets, that French interest rates have risen sharply since January of this year, and that the political fragmentation hampering the consolidation of public finances will, in its view, continue even after the 2027 presidential election. Le Figaro ↗

It is this rating level that puts the numbers in perspective. Seven days earlier, on September 11, the same agency upgraded Spain's rating from A to A+, a move the Spanish Ministry of Economy welcomed. At that time, Spain was still one notch below France. After Friday's move, the two countries are now at the same level at Scope. When Spain's rating was upgraded, El País had already noted that France's risk premium is higher than Spain's. El País ↗ Le Figaro ↗

However, the significance of this move should not be overestimated. Scope is the most important European rating agency and the only European one recognized within the European Central Bank's rating framework, but on the market it stands far behind the American trio. According to a 2024 calculation by the European regulator ESMA, based on revenue in the European Union market, Scope held a share of 1.83 percent, compared with 47.8 percent for S&P Global Ratings, 30.6 percent for Moody's, and 11.9 percent for Fitch. A rating from Scope alone does not mean that France has also lost its AA- level with the other agencies. ESMA ↗ Le Figaro ↗

For comparison with Slovakia

According to Eurostat, Slovak public debt reached 62.5 percent of GDP at the end of March, or 86.8 billion euros. The European Union average was 82.9 percent. The forecast French level is thus roughly double the measured Slovak figure and well above the EU average. This is, however, a comparison of a forecast with an actual figure, not of two equivalent quantities. Pravda ↗

Slovakia, meanwhile, has its own experience with the same agency. On May 22 this year, Scope downgraded it from A with a negative outlook to A- with a stable outlook. At the time, the Ministry of Finance stressed that Scope is a smaller agency that had merely brought its rating in line with the level Fitch had confirmed for Slovakia two weeks earlier, and that the change should not have any significant impact on the markets or on the cost of state financing. HN ↗ TA3 ↗ SITA ↗

On Scope's scale, France, even after Friday's downgrade, thus stands two notches above Slovakia, which has A-. Le Figaro ↗

What was written about it here

The Slovak and Czech media monitored by HotInfo had not published a separate report on the French 2027 budget or Saturday's debt forecast by Sunday morning. In the six days before this text was published, they did not have a single article whose headline linked France to debt, the budget, the deficit, or a rating, and the name of the Scope agency did not appear in a headline even once. Yet they wrote intensively about France — just about other things: Russia's hybrid attacks, oil prices and the G7 summit, Marine Le Pen, or the nomination of the national football team.

The report on the record debt was published on Saturday and overnight into Sunday by French, German and Belgian media, including Le Monde, Le Figaro, France 24, Die Zeit, n-tv, La Libre, De Morgen and Het Laatste Nieuws. De Morgen ↗ Het Laatste Nieuws ↗ As early as September 16, the Italian daily La Repubblica had already framed the French situation with a headline calling France the "new Italy" and noting that investors are watching the budget, the rating, and the presidential election. La Libre ↗ Die Zeit ↗ La Repubblica ↗