Rising public debt poses new challenges for France’s economy

France's public debt has begun to climb once more, reaching 113% of GDP in the second quarter, an increase of 2.4 percentage points since the end of last year.

This marks a shift from the declining trend seen over the previous three years, Caliber.Az reports.

At the conclusion of the last three years, the debt-to-GDP ratio had been consistently decreasing, ending 2023 at 1.2 percentage points lower than the previous year.

The highest ratio in modern French history occurred in 2020, when the COVID-19 pandemic drove the debt-to-GDP figure up by 17.3 percentage points to 114.7%. Current President Emmanuel Macron now ranks third among French leaders for the rate of increase in this ratio, which has risen by 14.9 percentage points during his tenure.

François Hollande, who served the shortest presidency since 1980, had the lowest increase, with the ratio rising by just 7.4 percentage points. Jacques Chirac followed with an 8.5 percentage point increase.

Significant rises were recorded under Nicolas Sarkozy, whose term saw the debt-to-GDP ratio grow by 23.3 percentage points, and François Mitterrand, whose presidency witnessed a 27.9 percentage point increase. Overall, since Mitterrand took office in 1981, the public debt-to-GDP ratio has increased more than fivefold.

France's public debt has surpassed €3 trillion, placing the economy in a challenging position, as Prime Minister Michel Barnier stated during an appearance on France 2. "Our country is facing an extremely difficult situation," he said, noting that servicing the debt costs over €50 billion annually.

Current estimates suggest that France's public debt stands at nearly €3.16 trillion.

Barnier assured that the government would not allow either an increase in public debt or a reduction in environmental standards. The administration aims to control spending and maintain pension reforms, prioritizing healthcare and immigration control. He also hinted at the possibility of raising taxes on the wealthiest citizens, stating, "I will not rule out that the wealthiest among us may be called upon to help normalize the economic situation."

By Tamilla Hasanova