France: unpleasant budget arithmetic

If all goes well in 2026 - a somewhat shaky assumption in recent weeks due to the war in the Middle East and the oil crisis - France will be paying almost € 75bn in interest on its debt this year (2.4% of GDP), compared with less than € 30bn in 2020. If all goes well over the next decade - a truly bold assumption - this interest burden will have doubled by 2036 and will absorb almost 4% of GDP, i.e. more than the target set for the defence budget at that time. Such is the implacable arithmetic of running budget deficits and replacing debt issued at low rates with debt issued at higher rates. In other words, France has lost all capacity to stabilise its economic cycle.