France's 2027 budget draft sees debt at 121.7% of GDP despite spending cut
Public spending is projected to ease to 56.9% of GDP in 2027 from 57.1% in 2026, with tax revenue at 44.2% of GDP.
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The draft lands against a backdrop of mounting pressure on French borrowing costs. Earlier this week, the French 10-year bond yield climbed 11 basis points to 4.56%, its highest level since 2008, and the spread over German bunds widened to 100 basis points. Scope also downgraded France's credit rating to A+ from AA- earlier this week.
Prime Minister Sébastien Lecornu has warned that without corrective action, France's 2027 deficit could exceed 6.5% of GDP. He has separately said a rise in rates would add €10 billion a year to the country's debt-servicing costs, and Les Echos has reported he is reaching out to National Rally to try to align the government on budget plans.
The spending reduction built into the draft, from 57.1% to 56.9% of GDP, is modest set against a debt ratio stuck near 122% of GDP, and does little to address the structural deficit problem Lecornu has flagged. With yields already at their highest since 2008 and the Scope downgrade already reflected in the market, the projection reads as a holding pattern rather than a meaningful fiscal consolidation, and the bearish pressure on French debt looks set to continue.