France’s fiscal policy in focus

France can sustain its public debt, but delayed fiscal consolidation will increase volatility and risk premiums on French government bonds.

• GDP growth is expected at 0.6% in 2026 and around 1.0% in 2027, while headline inflation should average 2.1% in 2026 before easing towards 1.7% in Q4 2027.
• Public debt has reached €3.54 trillion, or 118% of GDP, with more than €1.1 trillion added since 2019; the 2025 deficit was 5.1% of GDP and is unlikely to decline further in 2026.
• Without deficit-reduction measures, debt could exceed 130% of GDP by 2030, while stabilising the debt ratio would require an estimated fiscal effort of around €126 billion over 2027–31.
• The 2027 budget, due to be adopted by the end of 2026, is pivotal because presidential elections are scheduled for 18 April and 2 May 2027, followed by likely legislative elections in late May or early June.
• Thirty-year OAT yields were close to 4.9% and ten-year yields marginally above 4.1% on 28 August 2026, while the ten-year spread over Bunds had widened to around 85 basis points from roughly 55 basis points at the beginning of the year.

Takeaway: French government bonds remain attractive for medium- to long-term investors because of their high yields, liquidity and investment-grade rating, but a weak 2027 budget could trigger higher yields, a credit-rating downgrade and greater volatility.