France is facing growing pressure over its public finances as its borrowing costs have risen above those of several southern European countries once viewed as less financially reliable.
French government 10-year bonds are currently yielding around 4.11%, compared with 3.7% for Portugal, 3.8% for Spain, 3.9% for Greece and 4% for Italy.
The figures have fueled renewed debate over France’s fiscal policy and its failure to bring its deficit and debt closer to the limits set under the European Union’s Maastricht framework.
French commentator and author Renaud Girard argues that the situation has reached a point where France risks becoming one of Europe’s least credible borrowers. He says the country should introduce a constitutional “golden rule” limiting government borrowing for day-to-day spending.
France’s debt burden has continued to rise
When Emmanuel Macron became president in 2017, France was committed to meeting the Maastricht criteria, which call for a public deficit below 3% of GDP and public debt below 60% of GDP.
Instead, French public debt has increased from around €2.2 trillion to €3.46 trillion over the past nine years, rising from approximately 98% to 118% of GDP.
Girard argues that the deterioration cannot be explained entirely by the COVID-19 pandemic or Russia’s war against Ukraine. He points to Germany as a comparison, noting that German public debt remained around 64% of GDP during the same period despite the country facing both crises.
The difference in fiscal positions has also affected borrowing costs. Germany can currently finance itself at significantly lower rates than France, reflecting stronger investor confidence in its public finances.
Italy now looks stronger to investors
The shift is particularly striking in the case of Italy, a country that has historically been associated with higher fiscal risks.
Italy has recorded a primary budget surplus since 2024, meaning government revenues have exceeded spending before interest payments on the debt are taken into account. Its primary surplus currently stands at around 0.8% of GDP.
France, by contrast, has a primary deficit of around 3% of GDP.
Girard argues that this helps explain why financial markets are currently treating Italy more favorably than France, despite Italy’s own substantial debt burden.
The situation has also revived concerns in northern Europe, where governments that maintain tighter control over public finances have increasingly viewed France as an outlier within the eurozone.
A problem that predates Macron
Girard’s criticism is not limited to Macron’s presidency. He argues that France’s reliance on borrowing to finance current spending has developed over several decades and has been pursued by governments on both the left and right.
The trend accelerated under presidents including François Mitterrand, Jacques Chirac, Nicolas Sarkozy and François Hollande.
Girard recalls a conversation involving Francis Mer, who served as finance minister under Chirac in 2002. According to Mer, he attempted to warn Chirac about the steady rise in French public debt and proposed measures to address it.
Chirac reportedly responded by arguing that the system had already lasted for two decades and could therefore continue for another 20 years.
For Girard, the episode illustrates how successive governments have tolerated the accumulation of debt rather than addressing the structural causes of France’s fiscal problems.
Calls for a constitutional fiscal rule
The debate is gaining importance as France enters a new political cycle. With the next presidential election approaching, fiscal policy is expected to become one of the central issues of political debate.
Girard supports the introduction of a constitutional fiscal rule that would prevent governments from borrowing to cover ordinary operating expenses while allowing debt to finance major long-term investments.
Such investments could include nuclear power plants, rail infrastructure, hydroelectric facilities, artificial intelligence and defense projects.
Germany, Italy, Switzerland and Spain have already introduced various forms of fiscal rules into their constitutional or legal frameworks.
Girard argues that France should adopt a similar mechanism and commit itself to respecting it.
The objective, he says, would be to restore investor confidence, reduce borrowing costs and prevent France from remaining an outlier in European public finances.
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