Paris, which has lost control of its public finances with a deficit exceeding 6 percent of GDP and public debt at 112 percent, is provoking dread in Germany and fears of destabilization across the entire eurozone.
The German daily Die Welt describes how the country maneuvered itself into a financial dead end through excessive state spending. As early as 2000, public debt stood at approximately 58.9% of GDP, or about 1.4 trillion euros in absolute terms.
France has not recorded a budget surplus since 1980, which points to a pattern of persistently high public spending. After Poland and other Eastern European countries joined the EU, the French economy grew faster, but debt rose to approximately 65% of GDP. France's spending policy remained expansionary despite economic growth and a favorable business cycle. After 2008, the global financial crisis hit France hard. Debt climbed to 83.0% of GDP (2010), or approximately 1.9 trillion euros in absolute terms. In the years 2012 to 2016, France struggled with low GDP growth (often below 1%) and high unemployment. Debt reached approximately 97.5% of GDP (about 2.1 trillion euros) in 2015.
President Emmanuel Macron did introduce structural reforms in 2017 that in the short term brought the budget deficit below the Maastricht limit of 3%, but the accumulation of debt did not stop for long. By 2023, debt had breached the 3 trillion euro mark, and the debt-to-GDP ratio stood at 110.6 percent (approximately 3.1 trillion euros). The budget deficit reached 5.5 percent, far above the EU limit.
All indications are that this is not a temporary problem, as German experts see it, but a systemic weakness of the French state, where budget deficits have become the norm. In 2025, the budget gap amounts to 60 billion euros, and new borrowing has reached 6.2 percent of GDP, according to European Commission forecasts. That is twice the EU limit of 3 percent.
France has always avoided rigorous reforms of its social system, preferring to borrow against future social promises. Now that model is cracking. Pierre Moscovici, head of France's Court of Auditors, cited by German media, calls the situation "dangerous." Former Prime Minister Michel Barnier warns of a "great storm" on financial markets. This is no exaggeration: the yield on 10-year French government bonds now exceeds that of Greek bonds, and the euro has fallen to 1.0474 dollars, close to its annual low.
Economists are sounding the alarm because French bonds are in the hands of international investors. If Paris's fiscal policy ultimately collapses, there will be a sell-off of French bonds, driving up borrowing costs. Rating agencies S&P and Moody's are threatening a downgrade of French paper, which could trigger a panic spiral.
On the other hand, there is no shortage of reassuring commentary. The French crisis is reminiscent of Italy's problems — a country with debt at 140 percent of GDP that has been grappling with deficits for 100 years, yet Rome, despite everything, maintains stability through reforms and ECB support. Greece, after the 2010 crisis, has been effectively mitigating risk. France, however, as the second-largest economy in the eurozone, is systemically more important. Its problems could "infect" the entire EU, and Germany could then be forced to intervene — whether through a bailout or fiscal reforms.
