French public debt: (un)sustainable?

After two consecutive years of fiscal slippage and a public deficit that will exceed 6% in 2024 , the French government announced a budget effort of €60 billion to reduce the deficit to 5% in 2025. Beyond 2025, the government aims to bring the public deficit back to 3% by 2029. In this report, we conduct several scenarios of a debt sustainability analys is (DSAs) to better understand the risks re garding a potential sharp deterioration regarding the French fiscal situation . Our baseline scenario suggests th at French public debt w ill be on an upward trend at least until 2029 , when it will stabiliz e at 119% of GDP . But a concerted effort towards budgetary consolidation, even though the debt trajectory would still rise in the short term, could revert debt to a more sustainable path, stabilizing in our baseline scenario or declining based on the government's assumptions. Our simulations clearly indicate that achieving debt stabilization will be a significant challenge for the government , and the future primary balance— as the crucial indicator for the government’s determination to stabilize debt —must be closely monitored .