France's Record-Breaking Debt Woes Cast Shadow Over Presidential Election

France's public debt has reached a record high during President Emmanuel Macron's two terms in office, reaching 119% of gross domestic product. This is causing concern among investors and has emerged as a key issue ahead of next year's presidential election.

The government has proposed spending cuts worth €54 billion ($61 billion), but these are expected to be insufficient, and the budget will likely overshoot EU limits for the third consecutive year. The national debt is forecasted to grow to nearly 122% of GDP by the end of next year.

Radical-left presidential candidate Jean-Luc Melenchon has proposed canceling French government bonds held by the European Central Bank to unlock funds for public spending, but this idea has been met with skepticism. ECB President Christine Lagarde described it as a 'pure violation' of EU treaty and warned that freezing the debt could lead to creditors demanding exorbitant terms or refusing to lend.

France's high debt levels are largely due to the country's history of budget deficits, which have been exacerbated by recent events such as the pandemic and energy crisis. The government spends heavily on public services, but interest payments on the debt are expected to surpass €90 billion in 2027.