The country will have to pay more than three times as much in interest by the end of this decade, says François Villeroy de Galhau.
France runs the risk of gradual economic development “suffocation” unless budget and debt problems are addressed, the Bank of France governor warned.
In an interview with La Croix on Saturday, Francois Villeroy de Galhau acknowledged that France is dealing with a ‘serious budget problem’ as the government deficit remains high at 5.4% of GDP in 2025, only slightly improved from 5.8% last year. He said France must reduce the deficit to 3% by 2029 to restore budget credibility.
‘Our country is not threatened with bankruptcy, but with gradual suffocation’ Villeroy de Galhau said, pointing to debt servicing costs expected to rise from €30 billion in 2020 to more than €100 billion by the end of the decade. He warned that higher interest rates are already driving up borrowing costs for households and businesses, while diverting resources from priorities such as defense and the green transition.
‘Finally, and above all, it is an increasingly heavy debt that we leave to our children and grandchildren’ he said. France’s national debt now stands at 3.3 trillion euros, or about 115% of GDP.
His comments came after credit rating agency Moody’s revised the outlook for French government bonds from stable to negative, citing political considerations “fragmentation” that could hinder policymaking. Earlier this year, both Fitch Ratings and S&P Global Ratings downgraded France’s credit rating to A+, also signaling fiscal and political risks.
Villeroy de Galhau said Moody’s is now the only major agency to still give France a double A rating. “A sign that the country retains strengths, even though the outlook is negative.”
He maintained his forecast for modest growth of around 0.7% in 2025, noting that France remains “The most important European country that has created the most jobs in the last ten years.” Unemployment in France, which has traditionally been high, is currently around 7.5%.
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