France is navigating a critical financial phase, marked by a general deficit reaching 5.8% of GDP in 2024, placing it third among the most indebted European nations. Olivier Baste, Director of Economic Studies at Xerfi and an expert on European financial affairs, describes this deterioration as more than a temporary situation—it reflects a structural flaw in public fiscal policy.
The causes of France’s deficit extend beyond the impact of recent crises. Weak economic growth, rising debt costs, and stagnant public spending despite the end of emergency periods are deepening the imbalance. France has not yet managed to move away from the exceptional spending policies implemented during the pandemic and energy crisis, continuing an expansive approach without generating tangible economic returns.
According to Eurostat data, France recorded a public deficit of 5.8% of GDP in 2024. This figure highlights a growing divergence within the European Union, where countries like Denmark and Ireland have achieved budget surpluses. France’s deficit has been expanding for two consecutive years, while most EU nations have begun reducing expenditures post-crisis.
In response to these challenges, France is considering bold measures, including the potential elimination of two official holidays to ease pressure on its strained budget. While the term ‘austerity’ carries political sensitivity, Baste suggests that France will need to implement fundamental reforms in public finance, especially with the return of European discipline rules limiting deficits to a maximum of 3%. Failure to act could lead to a credit rating downgrade and increased borrowing costs.
Despite the severity of the situation, France’s position is not yet catastrophic. The comparison with other European countries shows that high deficits are not inevitable. What is needed is strong political will and a reallocation of spending toward initiatives that boost growth and reduce the state’s burden.
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France in the Vortex of Financial Deficit: Expert Reveals the Economic Future of Europe’s Core
France updated on Saturday, July 26, 2025, at 03:48 AM (Abu Dhabi Time), confirmed by Olivier Baste, Director of Economic Studies at Xerfi and expert in European financial affairs, that France is going through a sensitive financial phase due to a general deficit reaching 5.8% of GDP in 2024, placing it third among the most indebted European countries.
Baste considered this deterioration ‘not just an emergency situation, but reflects a structural flaw in public fiscal policy,’ at a time when most EU countries are striving to rebalance their budgets after successive crises.
He added in an interview with Al-Ain News that the causes of the French deficit go beyond the impact of crises, noting that ‘weak economic growth, rising debt costs, and stable public spending despite the end of crises are all factors deepening this deficit.’
He emphasized that France has not yet succeeded in moving away from the exceptional spending imposed during the COVID and energy crisis, continuing an expansive approach without achieving tangible economic returns.
In light of the new figures released by Eurostat, which revealed a significant disparity in public deficit levels among EU countries, it was necessary to shed light on the current economic situation, especially in France, one of the three most affected countries.
According to 2024 figures, France recorded a public deficit of 5.8% of GDP. How do you explain this deterioration compared to major countries like Germany or even Italy, whose situation has improved?
The French deficit is not just a reflection of temporary spending or a response to a crisis, but has become structural, meaning that public expenditures consistently exceed resources regardless of economic conditions. What is concerning is that we are seeing a growing deficit for two years, while most European countries have started to reduce spending after the COVID and energy crisis.
A bold step: France is considering eliminating two official holidays to save its burdened budget.
What are the reasons for this high deficit compared to France’s European neighbors?
Meanwhile, countries like Denmark and Ireland recorded a budget surplus. What distinguishes these countries compared to France?
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Do you think France will have to adopt an austerity policy soon?
I won’t use the term austerity because it raises political sensitivity, but yes, France will be forced to implement fundamental reforms in public finance, especially after the return of European discipline rules (such as the maximum deficit at 3%). Otherwise, France will face the risk of a credit rating downgrade and rising borrowing costs. Also, the French situation is not catastrophic yet, but it’s dangerous. The comparison with other European countries shows that high deficits are not inevitable. All it takes is strong political will and a reallocation of spending toward what strengthens growth and reduces the burden on the state.
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