France's Debt Crisis: How Did It Reach a Whopping €3.4 Trillion?
France's national debt has ballooned to a staggering €3.416 trillion. But how did the country reach this point? Let's delve into the historical context and contributing factors to understand this significant economic challenge.
A Historical Overview of French Debt
Interestingly, the last French government without any debt was under François I in 1535. Since then, the state has consistently borrowed. However, there have been periods where France managed its finances more effectively.
After 1945, the state borrowed to invest in infrastructure like roads and telephone networks – considered 'good debt'. In 1974, France's debt was a manageable 17% of its GDP. But the first oil crisis in that year marked the beginning of financial troubles, leading to rising prices and unemployment.
Macron Era and Soaring Debt
France's debt continues to climb, reaching a new peak in the second quarter of 2025 at €3.4 trillion, or 115.6% of GDP. This surpasses the previous quarter's record of €3.345 trillion (114% of GDP). Since the late 1990s, the debt has been on a relentless upward trajectory, nearly doubling since the early 2000s when it was 60.5% of GDP. When Emmanuel Macron took office in mid-2017, the debt stood at 101.2% of GDP (€2.281 trillion). In less than a decade, it has increased by over €1 trillion.
Structural Issues and Government Spending
The fundamental issue is that since 1975, the French state has consistently spent more than it earns. These annual deficits accumulate, adding to the debt burden. In 2024, public spending accounted for 57.1% of GDP (€1.67 trillion), with nearly a third allocated to social benefits (32.3%). Core state functions like defense, police, and justice appear relatively minor in comparison.
The Future of French Finances
With rising interest rates, refinancing deficits and past loans is becoming increasingly expensive and painful. The era of easy money is over, posing significant challenges for the French economy. This situation demands careful consideration and strategic financial planning to address the growing debt crisis.