France’s government expects interest charges to reach €91.2 billion in 2027, putting pressure on other spending as lawmakers review a draft budget proposing a €54 billion fiscal adjustment.
In its Oct. 1 budget presentation, the government put 2026 interest charges at €79.2 billion. It proposed a €340 billion ceiling on debt issuance for 2027, compared with €310 billion for 2026. The fiscal adjustment includes €43 billion in new measures and €11 billion from measures already adopted or underway.
Finance Minister Roland Lescure said spending would account for 60% of the effort. The government identified ministries and state operators among those affected by savings and said interest costs compete with other budget priorities.
Reuters reported that the yield on France’s 10-year government bonds briefly reached 4.9877% on Oct. 20 before a later reading of 4.88%. The outlet put the yield gap over comparable German bonds at about 150 basis points. It also reported that an early October peak of 4.9937% was the highest since July 2002.
A higher market yield affects the state’s costs when it issues bonds or replaces maturing debt. Existing fixed-rate bonds retain their scheduled coupon payments even when their trading prices change. A buyer who pays less for one of those bonds receives a higher yield.
Agence France Trésor said negotiable state debt had an average maturity of eight years and 184 days at the end of 2025. Its €347.7 billion in medium- and long-term issuance that year carried a weighted average yield of 3.14%.
The European Central Bank says long-term yields reflect expectations for inflation and real interest rates. Investors also seek a premium for interest-rate risk, which can be influenced by the amount of debt they expect the market to absorb. Liquidity and default risks may affect yields as well.
The National Institute for Statistics and Economic Studies (INSEE) measured France’s public debt at €3,595.5 billion, or 119% of gross domestic product, at the end of the second quarter of 2026. Eurostat put France’s 2025 deficit at 5.1% of GDP, compared with 3.1% for the European Union and 2.9% for the euro area.
The draft budget forecasts a deficit of 5.4% of GDP in 2026 and targets 5% in 2027. It projects debt at 121.7% of GDP next year. Those figures are estimates, and the proposal remains subject to parliamentary approval.
Parliament is reviewing the draft finance bill. INSEE’s next public-debt release, covering the third quarter, is scheduled for Dec. 18.
