French national debt has grown steadily over the last 30 years. It is the sum of all public deficits accumulated since the mid-1970s. To compare the amount of national debt to the government’s financing capacity, it is expressed as a percentage of gross domestic product (GDP) – debt-to-GDP ratio – which indicates how many years of wealth creation (GDP) are needed to repay it.

Under Jacques Chirac, the debt rose from €663.5 billion to €1,211.4 billion, or from 55.5% to 64.1% of GDP. Under Nicolas Sarkozy, it reached €1,833.8 billion, or 90.2% of GDP. Under François Hollande, it hit €2,258.7 billion, or 98.4% of GDP.

At the end of the first quarter of 2025, France’s debt stood at €3,345.4 billion, or 113.9% of GDP. While this debt is the result of political choices that determine the country’s revenue and spending, it also depends on the economic climate, which can make managing the debt easier or more difficult.

Amid developments such as the dot-com bubble, the economic boom of the 2000s, the subprime crisis in 2008, the eurozone recession, and the Covid-19 pandemic, the governments of Chirac, Sarkozy, Hollande and current President Emmanuel Macron have experienced both gloomy and bright economic conditions.

How economic conditions influence the debt

The economic situation may be analysed using two parameters, both of which are rates: the interest rate (r), set by the European Central Bank (ECB), which determines the interest payable on debt; and growth rates (g for growth), which measure the annual increase in wealth created (GDP).

This situation has two effects.

The first effect is unfavourable to public finances. It occurs when economic conditions cause the interest rate (r) to be higher than the growth rate (g), ie r-g > 0. In this context, the surplus wealth created by growth is less than the interest payable on the debt. De facto, the debt increases, even if policy choices lead to government revenue financing government spending (excluding interest payments on the debt), ie if the primary deficit is zero.

Figure 1 shows that this unfavourable economic situation occurred during Chirac’s mandate. During this period, the sum of the primary deficits (government expenditure excluding debt servicing) and revenue remained virtually stable (blue curve). Debt rose due to high interest rates (r between 2.5% and 5%), combined with moderate growth (g around 4%), which caused debt to increase (red curve).

A second effect is favourable to public finances. If the real interest rate is lower than the growth rate (r-g < 0), then debt (debt-to-GDP ratio) can be stabilised, even if spending, excluding interest charges, exceeds revenue – that is, even if policy choices lead to a primary deficit. In this case, the annual increase in wealth created (GDP growth) is greater than the interest burden.

Figure 1 shows that such a situation occurred during Macron’s terms in office. During this period, the sum of primary deficits rose sharply (blue curve): political choices led to government spending (excluding interest payments on debt) exceeding its revenue. However, debt increased at a slower rate (red curve), as interest rates remained lower than growth (less than 2% for interest rates, r, compared to more than 2.5% for growth, g).

Figure 1: The gap between the red line and the blue line measures the contribution of net interest charges from growth (r-g) to the change in the debt-to-GDP ratio. Data from France’s National Institute of Statistics and Economic Studies (INSEE). Fourni par l'auteur

How economic conditions contribute to the debt

Recent history divides presidential terms into two groups. The first group includes those in which “bad” economic conditions are the main reason for the increase in debt (debt-to-GDP ratio), which is shown by the red curve rising more than the blue curve in Figure 1. The second group includes terms in which primary deficits are the main reason for the increase in debt, which is shown by the blue curve rising more than the red curve.

The first group includes the terms of Chirac and Sarkozy. The second includes those of Hollande and Macron.

The data show that during Chirac’s two terms in office (1995–2007), the debt-to-GDP ratio increased by 8.99 points (0.75 points per year). This increase was due to a “poor” economic climate for public finances (r-g effect > 0), which caused the debt-to-GDP ratio to rise by 10.07 points, while the dynamics of primary deficits helped to reduce it by 1.08 points. During this period, interest rates on public debt were very high, ranging between 4% and 6%.

Under Sarkozy’s term (2007-2012), the debt-to-GDP ratio rose by 22.76 points (4.55 points per year), of which 11.01 points were due to primary deficits, representing 48% of the total increase, and 11.75 points were due to economic conditions (52% of the total). Interest rates remained high, between 3% and 4%. The large primary deficits followed policy choices aimed at cushioning the subprime crisis.

Conversely, during Hollande’s term (2012-2017), rising primary deficits accounted for 71.5% of the total increase in the debt-to-GDP ratio (9.13 points out of a total increase of 12.74 points, or 2.55 points per year). Interest rates continued to fall, from 3% to less than 2%, while primary deficits were not curbed, even though the subprime and sovereign debt crises had passed.

Primary deficits under Macron

Macron’s time in office, until 2024, further accentuates this trend. The debt has only increased by 10.8 points (1.35 points per year), as the economic situation has caused it to fall by 15.31 points, with interest rates becoming very low, falling below 1% in 2020.

The increase in debt can be explained solely by the very sharp rise in primary deficits, which caused it to grow by 26.11 points during a period when the Covid pandemic and the energy crisis led the government to protect citizens from excessive declines in purchasing power.

The period from 2025 to 2029 falls into the second scenario, in which economic conditions will make it increasingly difficult to manage public debt (r-g < 0). Even with a policy objective of controlling debt, primary deficits can only be reduced gradually. With these deficits continuing to weigh on debt, growth will increasingly fail to offset rising interest rates.

The budget that Prime Minister François Bayrou presented on July 25 will increase the debt-to-GDP ratio by 4.6 points (0.92 points per year) in a context in which economic conditions will reduce it by 1.7 points. Primary deficits will increase it by 6.3 points. Bayrou’s budgetary proposal will stabilise the debt-to-GDP ratio at around 117%, which is far from the stabilisation at around 60% achieved during Chirac’s terms in office.

Balance between spending and revenue

The evolution of the primary deficit (the difference between spending, excluding interest charges, and revenue) shows that over the last 29 years, there have been 10 years in which it increased. There have been three major increases: by 1.82 points in 2002, with the stock market crash; by 4.2 points in 2009, with the subprime crisis; and by 6.1 points in 2020, with the Covid pandemic. In 2002, the increase in the deficit consisted of 1.1 points linked to increases in spending and 0.72 points linked to reductions in revenue. The sharp increases in 2008 and 2020 were mainly due to spending increases: 95% of the 4.2 points in 2008 and 97% of the 6.1 points in 2020. To contain debt, revenues eventually increased after crises: between 2004 and 2006, between 2011 and 2013, and between 2021 and 2022. However, there were no reductions in spending after 2011 or after 2023.

It is therefore persistent spending at a high level that explains the increase in the debt-to-GDP ratio. Only a very recent period, in 2023, amid the Ukraine crisis, led the government to reduce revenues in order to preserve purchasing power in a context of high inflation.

Restricting public spending

The Bayrou government’s plan, by placing three-quarters of the adjustment on spending, proposes to regain control of public spending so that it represents 54.4% of GDP in 2029 – the level seen before the 2007 crisis. Beyond stabilising the debt-to-GDP ratio, this policy choice also permits consideration of the possibility of managing a potential future crisis. The question that then arises is: which spending items should be reduced as a priority?

Figure 2: Variation in a type of expenditure per term in office. The variation measures the difference in GDP points between expenditure at the end of a term (or, for Macron, 2023) and expenditure at the beginning. INSEE data. Fourni par l'auteur

The spending items that have increased since 1995 are those related to the environment (+0.8 percentage points of GDP); health (+3.2 percentage points of GDP); leisure, culture and religion (+0.6 percentage points of GDP); and social protection (+1.3 percentage points of GDP). Those that have fallen are related to general government services (-4.1 points of GDP), defence (-1.1 points of GDP) and education (-1.5 points of GDP). In the future, a budget that reallocates spending in favour of defence and education through better restriction of health and social protection spending should therefore be seen as a simple rebalancing exercise.

A weekly e-mail in English featuring expertise from scholars and researchers. It provides an introduction to the diversity of research coming out of the continent and considers some of the key issues facing European countries. Get the newsletter!

This article is republished from The Conversation, a nonprofit, independent news organization bringing you facts and trustworthy analysis to help you make sense of our complex world. It was written by: François Langot, Le Mans Université

Read more:

François Langot ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.