France’s public debt is on track to reach its highest level since 1978, underscoring the scale of the fiscal challenge facing the eurozone’s second-largest economy as deficits remain stubbornly elevated.

A source at the finance ministry said public debt is expected to climb to 119.3% of gross domestic product in 2026 and 121.7% in 2027, more than double the European Union’s 60% reference threshold that member states are meant to pursue.

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According to France’s national statistics agency, Insee, those levels would mark an unprecedented burden since 1978. The ministry source described the increase as “automatic,” the result of a deficit that remains high.

France Remains Among The Eurozone’s Most Indebted Economies

France is now the third most indebted country in the eurozone, behind only Greece and Italy. The contrast with some of its peers is notable: Spain’s debt fell below 100% of GDP in July, while Portugal reduced its debt ratio to below 90% in 2025.

Under EU fiscal rules, the annual public deficit should not exceed 3% of GDP. France, however, recorded a deficit of 5.1% last year, and the government expects it to rise to 5.4% this year.

Those figures have placed the country under enhanced EU monitoring for the past two years. The government now expects the deficit to ease to 5% next year, when France will hold elections to choose its next president and government.

Budget Scrutiny Intensifies Ahead Of Election Year

The government has submitted draft 2027 budget measures to the High Council of Public Finances, or HCFP, an independent fiscal watchdog that will assess their macroeconomic credibility and budgetary feasibility.

Prime Minister Sébastien Lecornu said on Thursday that the government is planning €54 billion in adjustments and spending cuts in the 2027 budget. But with elections approaching, he has left parliament to decide on some of the most politically sensitive measures, including a proposal to reduce tax breaks for pensioners.

The head of parliament’s finance committee has already argued that the proposed cuts would fall too broadly across the population and could hit lower-income households hardest.

Officials Say There Is Still Time To Stabilize The Outlook

Despite the deterioration in the fiscal outlook, the head of the HCFP said the situation is not yet beyond repair.

In an interview with Le Parisien, Amélie de Montchalin said, “The crisis is neither certain nor guaranteed — nor is it the only outcome.”

“France is not doomed, provided the choices made are swift and responsible,” she added.

The growth forecast for 2026 has recently been revised lower, as the French economy continues to struggle with weak consumer spending and, more recently, higher energy prices linked to the US-Israeli war against Iran.