Eurobank: France Faces No Immediate Debt Crisis but Long-Term Fiscal Risks

Paris, France. Eurobank has warned that France does not face an imminent public debt crisis similar to the eurozone turmoil of the 2010s, yet its ongoing deficits, sluggish growth and climbing borrowing costs create considerable longer-term risks. The assessment appears in a report on the country’s fiscal outlook ahead of the 2027 presidential election.

Structural roots of the deterioration

The report, titled “France: Presidential elections complicate fiscal consolidation”, argues that the decline in French public finances stems mainly from structural weaknesses and only to a lesser degree from cyclical factors. According to the bank, France is finding it hard to fund an costly economic and social model while potential growth is low and the tax burden is already high.

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Eurobank says the underlying difficulties come from public spending that remains high and hard to cut, low potential economic growth and little room to raise tax revenues further.

Factors limiting short-term risk

The bank points to several elements that reduce the chance of a sudden funding crisis. These are the size and diversity of the French economy, its broad tax base, the relatively long average maturity of its public debt and the strengthened European financial stability framework.

Medium-to-long-term concerns

Even so, Eurobank considers persistent primary deficits, slow growth and higher borrowing costs a significant medium-to-long-term risk, one that could have consequences for the wider eurozone. It says the central challenge goes beyond cutting the budget deficit in the near term and calls for a structural adjustment of the economic and social model, so that it matches the country’s long-term growth potential and fiscal limits.

In the bank’s words, restoring fiscal sustainability needs “a combination of systematic control of public spending, reforms to the pension system and public administration, as well as measures to strengthen productivity, employment and investment”.

Political uncertainty

The report adds that these pressures are made worse by uncertainty ahead of the presidential election scheduled for spring 2027, along with the fragmentation of political forces in the National Assembly. Together, these factors make it harder to carry out a coherent fiscal consolidation strategy.