French National Debt Set to Hit 122% of GDP, Reviving Calls to Cancel Government Bonds

The French government presented its 2027 budget bill on Thursday, October 1, at Bercy, against a backdrop of public debt on the verge of hitting a new record. According to official projections, debt is set to stand at 119.3 percent of gross domestic product in 2026, before climbing to 121.7 percent, and close to 122 percent of GDP, in 2027.

The press conference presenting the budget and the social security financing bill brought together Economy, Finance and Industrial, Energy and Digital Sovereignty Minister Roland Lescure, Minister for Public Action and Accounts David Amiel, Labor and Solidarity Minister Jean Pierre Farandou, and Health, Families, Autonomy and Disabled Persons Minister Stephanie Rist. The government highlighted 43 billion euros in new savings, bringing the total fiscal effort to roughly 54 billion euros once measures already underway from previous years are included, with the goal of bringing the deficit down to 5 percent of GDP, with no tax increases announced at this stage.

Given the scale of the debt, some political voices continue to push more radical solutions. France Unbowed candidate Jean Luc Melenchon has again raised the possibility of freezing, or even canceling, the share of French debt held by the European Central Bank. According to him, freezing this debt means transforming it into perpetual debt, that is, debt with no repayment deadline and a low or zero interest rate, which he argues effectively amounts to canceling it.

The proposal runs into firm opposition from the European Central Bank itself. Its president, Christine Lagarde, has repeatedly warned against this kind of scenario, noting that canceling national debt held by the central bank would violate European treaties and could durably destroy investor confidence in member states' sovereign debt.

As the presidential campaign enters its most contested phase, the debt question is emerging as one of the most divisive issues among candidates, pitting the fiscal discipline line defended by the government against the break with orthodoxy pushed by part of the radical left.

This account draws on reporting by the French Economy Ministry and Global Banking and Finance Review.