Amid protests, France's rising debt costs threaten stability

Résumé détaillé

France plans to spend an extra €4 billion on education amid nationwide protests. But with public debt mounting and interest costs climbing, how much fiscal room does the government have?

Deeply indebted, politically trapped in a standoff between extremes and led by a government without a parliamentary majority: These are the defining features of France's current predicament.

If, in response to nationwide protests, the government plans to provide €4 billion ($4.48 billion) in low-interest loans to renovate schools by 2030 and allocate a further €1 billion to universities by 2029, it is promising money the state simply does not have.

France's public debt stands at around 120% of gross domestic product (GDP). By comparison, Germany's debt-to-GDP ratio is roughly 65%, despite its €600 billion investment package for infrastructure and defense.

Germany still enjoys the highest possible AAA credit rating. France, by contrast, is rated AA, A+ or Aa3, depending on the credit agency.

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