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France is burning through money it doesn’t have. The budget deficit has reached €106.8 billion in the first six months of 2026 — a 6.4% increase compared to the same period last year. These figures come from the Ministry of Public Action and Accounts.
Despite Bercy’s announcements of cuts, spending is on the rise again. In July, €3 billion in credits were frozen. Not enough. Economic growth has been revised downward to 0.7% for 2026, directly reducing tax revenues — VAT is down, corporate tax is disappointing. It’s the classic mechanism of a slowdown: less growth, less money coming in, a swelling deficit. The government has also revised the public deficit upward, from 4.7% to 5% of GDP. This revision represents an additional €9 billion in deterioration, and it’s mainly due to spending, not a drop in revenue.
The Cour des Comptes had warned about this. It had expressed doubts about the government’s ability to meet the 5% GDP target for 2026. The first semester data proves it right.
Debt Servicing Costs Surpass Defense Budget
Here’s the painful figure: public debt servicing costs amount to €59 billion for 2026. The Defense budget, on the other hand, is set at €57.1 billion. Debt is therefore more expensive than the military. This is unprecedented and drastically changes the hierarchy of budgetary priorities — debt interest becomes the state’s largest expenditure, above everything else.
And it’s getting worse. The rates for 10-year Treasury bonds — OATs, the benchmark for government borrowing — hovered around 3.75% by mid-2026. Each new bond issue is therefore more expensive than before. The state is borrowing more, at higher rates, to finance a growing deficit. Not exactly a virtuous circle.
Total public debt reaches 117.5% of GDP. It’s a critical level, the kind of ratio where the apparent debt rate exceeds the country’s economic growth. The result: a snowball effect. Debt grows faster than the economy can absorb it. This level hadn’t been seen since the health crisis.
79% of Annual Deficit Target Used in Six Months
By the end of June, 79% of the annual deficit target had already been consumed. Six months in, and there’s barely a fifth of the budgetary margin left for the rest of the year. The trajectory seems difficult to maintain — that’s an understatement.
The slowdown in growth hurts in several ways at once. Less VAT collected because households are consuming less. Less corporate tax because companies are earning less. Meanwhile, public spending does not decrease at the same rate. The gap is mechanically widening.
It’s not yet clear if the government will announce additional measures by the end of the fiscal year. The €3 billion frozen in July did not change the trajectory. It would probably take much more to reverse the trend in the second half of the year.
The dynamics of interest rates add pressure that the raw deficit figures do not directly show. At 3.75% on 10-year OATs, each billion borrowed costs more in interest than in previous years. And France is borrowing a lot. The debt servicing cost of €59 billion for 2026 is not a ceiling — it could still rise if rates remain high and issuances multiply.
The debt-to-GDP ratio at 117.5% places France in a zone where markets are watching closely. It’s not an immediate crisis, but it’s the kind of dynamic that can quickly turn if bond investor confidence wavers.
The revision of the deficit from 4.7% to 5% of GDP means an additional €9 billion to finance. Mainly through spending. And with growth at 0.7%, revenues won’t compensate anytime soon.
OATs at 3.75% for 10 years.
Frequently Asked Questions
What is the exact amount of the French budget deficit in the first half of 2026?
The deficit amounts to €106.8 billion for the first six months of 2026, up 6.4% compared to the same period in 2025, according to the Ministry of Public Action and Accounts.
Why does debt servicing cost exceed the Defense budget?
The public debt servicing cost reaches €59 billion for 2026, compared to €57.1 billion for the Defense budget — an unprecedented situation that makes debt interest the state’s largest expenditure.
What is the level of French public debt relative to GDP?
French public debt represents 117.5% of GDP, a critical level where the apparent debt rate exceeds the country’s economic growth, a phenomenon not observed since the health crisis.
