France's Public Debt Projected to Reach 116.5% of GDP in 2025 Amid Fiscal Challenges

A recent social media post by Stanford University Professor Keith Humphreys has drawn attention to France's escalating fiscal concerns, stating, > "Hard to think of a scenario where France doesn't go bankrupt. Widespread sense of entitlement coupled with weak leadership in the face of fiscal disaster." This commentary comes as recent economic forecasts indicate a continued upward trend in the nation's public debt and persistent budget deficits.

According to the International Monetary Fund (IMF) and Eurostat, France's government debt-to-GDP ratio reached 113.1% in 2024 and is projected to increase to 116.5% by the end of 2025. The general government deficit stood at 5.8% of GDP in 2024, significantly above the European Union's 3% limit, leading to France being placed under the Excessive Deficit Procedure. Forecasts suggest the deficit will remain elevated at around 5.4% in 2025.

In response to these fiscal pressures, the French government has outlined a series of measures in its 2025 budget, aiming for a structural fiscal adjustment. These include new tax measures such as an exceptional surtax on large companies and high-income earners, an increase in the "Tobin tax" on financial transactions, and higher airplane ticket taxes. Concurrently, the government plans spending cuts across various sectors, impacting local government budgets, green transition initiatives, healthcare, research, and cultural funding.

The implementation of these measures is navigating a complex political landscape, including a hung parliament, which has seen the government rely on constitutional provisions like Article 49.3 to pass legislation. The IMF notes that while France's short-term sovereign debt risk remains low due to a liquid market and diversified investor base, the medium-term debt dynamics have weakened, posing a "moderate overall risk" if significant additional measures are not sustained.

Keith Humphreys, an Esther Ting Memorial Professor at Stanford University, is a noted psychologist and public policy expert, particularly in the field of addiction and mental health. His strong statement on France's financial stability reflects a broader concern among some observers regarding the nation's high public spending, which remains one of the highest among developed economies, accounting for approximately 57% of GDP in 2024.