In less than ten years, public debt has increased by more than 1,000 billion euros. It reached 113.7% of GDP and increased by more than 71 billion euros in three months. The government must quickly correct the situation if it wants to avoid a downgrade in its rating.
L’« Himalaya » that the new Prime Minister François Bayrou is preparing to climb continues to rise. France’s public debt reached 3,303 billion euros in the third quarter of 2024, or 113.7% of GDP, according to INSEE estimates published this Friday. Its highest level ever reached in absolute value, and the highest since the start of 2022, in percentage, therefore.
Over the past three months, the debt has increased by “71.7 billion euros”compared to 69 billion euros in the second quarter, calculates INSEE. An increase mainly due to state debt, which jumped by nearly 60 billion euros, according to national statisticians. At the same time, the debt of social security administrations also increased, as did that of local public administrations, “slightly”. As a reminder, in the first quarter, it already amounted to 3159.7 billion, then to 3228.4 billion in the second, or 112% of GDP.
Nothing very surprising given the meteoric rise we have witnessed since the start of the 2000s. At 1,082 billion euros at the start of 2004, our public debt has more than tripled in twenty years. And the pace is accelerating: in just seven years under the presidency of Emmanuel Macron, it has increased by more than 1,000 billion euros. The Covid crisis and “whatever it costs” have of course been there, however France is the only country in Europe which has not reduced its debt since, recalled as a warning the governor of the Bank of France François Villeroy de Galhau in Le Figaro . Only Greece and Italy do worse when measuring debt in relation to GDP, according to Eurostat data.
Debt peak reached in 2027?
Under the effect, among other things, of the increasing debt burden, public finances continue to slide. It is up to the new government to contain the public deficit in 2025, while it amounts to 162.4 billion euros in 2024, or 6.2% of GDP. If François Bayrou follows in the footsteps of his predecessor, this deficit could be maintained in the zone «acceptable» 5% in 2025. And if the projections of the previous government, validated by the European Commission, came to fruition, France would fall back below the 3% mark in 2029. But the trajectory of the debt would not be corrected as quickly . It should rise to 112.8% in 2024 according to INSEE, until reaching the peak of 116.5% in 2027. Then, if no edge fault is committed, it should begin to decline to return to 115.8% in 2029.
France, which until now took advantage of its economic weight within the euro zone to avoid a slimming treatment, no longer has a choice. The rating agencies are waiting for it around the corner. If it does not effectively take the path of cleaning up its finances in the short and medium term, its debt rating will be downgraded, going from category AA- to A+. As some investors refrain from holding bonds below this threshold, a mechanical drop in demand would occur, making the debt burden ever heavier. However, Agence France Trésor must already borrow 300 billion euros in 2025, an amount never reached before.
