France has reached 119 percent of its Gross Domestic Product (GDP) with a debt accumulation of nearly 3.6 trillion euros by the end of June. This figure, published by France's National Institute of Statistics and Economic Studies (Insee), has raised concerns about France's economic future. The country's debt has reached a level that will soon be compared with Italy and Greece, two other heavily indebted countries in the Eurozone, while economic growth has sharply declined.
Budget Deficit Reduction Plans
French Prime Minister Sébastien Lecornu announced earlier this month that he intends to propose savings worth 54 billion euros in the 2027 budget. This budget will be officially presented on Thursday. Lecornu has committed to reducing the budget deficit, which is the difference between annual expenditures and tax revenues, to 5 percent of GDP next year. However, it remains unclear whether his minority government will be able to garner sufficient support for its spending plans.
Economic Challenges and Forecasts
France had set a 5 percent deficit target for this year, but it is likely to fall short due to economic growth constraints and rising energy prices stemming from the war in the Middle East. Even before the figures were released on Tuesday, independent auditors and international bodies assessed it as unrealistic for France to meet its promise to reduce the budget deficit to below 3 percent of GDP by 2029, in accordance with European Union regulations.
The 2027 budget is the last budget that the government will discuss before next year's presidential election and has faced serious criticism from Lecornu's left-wing opponents. At the same time, the right-wing National Rally party, whose candidate Marine Le Pen is leading in the polls, has sent mixed signals regarding its plans.
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