The Challenge of Reducing French Public Debt: Budgetary Implications

France's public debt has surged to over 110% of its GDP, a significant rise from 21.1% in 1980. In June 2024, the European Commission placed France under the Excessive Deficit Procedure, compelling significant budgetary adjustments to restore fiscal sustainability. The Commission demands that France's structural deficit be reduced by at least 0.5% of GDP annually from 2028 to 2030. Two primary scenarios exist: a four-year plan requiring annual reductions of approximately €27.5 billion, and a seven-year plan requiring approximately €15.7 billion annually. The seven-year approach is recommended as it better preserves GDP growth, with the average annual growth rate projected at 2.52% versus just 2.15% under the four-year plan. Higher interest rates further complicate the task. In 2023, interest payments alone accounted for 1.8% of GDP, comparable to the combined budgets of the Ministries of Ecology and Interior. France must also work toward reducing its debt to the EU's 60% of GDP benchmark, currently more than 50 percentage points above target. The seven-year budgetary adjustment period offers the best chance of achieving debt sustainability while maintaining economic growth. France balances the need for fiscal discipline with the imperative of sustaining economic momentum.