France debt crisis deepens as borrowing hits record €340 billion, placing fresh pressure on Prime Minister Sébastien Lecornu as borrowing costs rise and political unrest complicates his 2027 budget. Foreign-held French debt and higher bond yields are drawing attention to France’s vulnerability among major G7 economies.
France record borrowing plan
France plans to borrow around €340 billion next year, equivalent to roughly €1.3 billion for every working day. The scale of the programme reflects large refinancing needs and continued government deficits at a time when investors are demanding higher returns to hold French debt.
Lecornu’s government has proposed about €54 billion in savings while targeting a deficit of roughly 5% of GDP. That target remains above an earlier commitment to Brussels, increasing pressure on Paris to demonstrate that its public finances are moving toward a sustainable path.
France’s public debt is around 119% of GDP, while interest costs are expected to climb further as older, cheaper debt is replaced with borrowing at higher rates.
Foreign-held French debt
One of France’s biggest vulnerabilities is the large share of government debt owned by investors outside the country.
Banque de France data cited in the report shows non-residents held about 56% of negotiable government debt at the end of 2025. The foreign share of long-term French debt securities had risen further by mid-2026.
Foreign ownership is not automatically a crisis, but it can make market confidence more important. International investors can reduce exposure quickly if they become concerned about fiscal policy or political instability.
France bond yields rise
France’s 10-year government bond yield reached about 4.79% on October 16 after approaching 5% earlier in the month, levels not seen for decades.
The spread between French and German borrowing costs has also widened. That gap is closely watched because German bonds are considered the eurozone benchmark.
Unlike countries that issue debt in a currency controlled solely by their own central bank, France borrows in euros. In an extreme market crisis, support would ultimately depend heavily on European institutions and the European Central Bank, potentially with policy conditions attached.
Budget vote and political unrest
The political challenge is becoming as important as the financial one. Lecornu does not command a parliamentary majority, making approval of his 2027 budget difficult.
The National Assembly is debating the package amid nationwide protests over fuel prices, household costs and public services. Large demonstrations on October 17 were followed by violence in several locations, according to authorities.
President Donald Trump separately linked the unrest to immigration and Islam, but the information presented does not establish such a connection. France’s fiscal difficulties are more directly tied to deficits, debt servicing, weak political consensus and broader economic pressures.
France G7 debt vulnerability
France does not have the G7’s highest debt burden, but several factors make its position unusual. Japan carries much more debt but holds most of it domestically. Germany has substantially lower debt, while Britain controls its own currency.
Italy is France’s closest comparison because it also has high debt and borrows in euros. However, France currently faces a combination of high foreign ownership, rising yields and political gridlock.
France still has access to bond markets and retains investment-grade credit ratings, so the situation is not comparable with the worst phases of Europe’s past sovereign debt crises.
The immediate test will be whether lawmakers can approve a credible budget while containing political instability. If borrowing costs continue rising and fiscal reforms stall, investor confidence could become the most important measure of France’s economic resilience.
