French Debt Problem: 3 Lines of Math
France pays about 4.8% to borrow for 10 years. Italy pays about 4.5%. Spain pays about 4.1%.
Read that again. The country of Airbus, LVMH and the Louvre now pays more to borrow than Italy or Spain. Ten years ago you’d have lost that bet: France paid 0.3% and Italy 1.5%.
Most stories blame France’s debt. It’s big. But measured against the size of its economy, Italy’s is bigger and Japan’s is far bigger. So size alone doesn’t explain it.
To see what’s really going on, forget France for a minute. Picture a household.
Meet The Household
Part 1: The shortfall. You earn $100,000 a year. You spend $105,400. You’re short $5,400. That’s your deficit. You borrow it.
Part 2: The debt. You already owe $119,000. Your old loans are cheap, a little over 2% on average, so interest costs you about $2,600 a year. But lenders now charge about 4.8% on new loans. Every time an old loan comes due, you replace it with a more expensive one.
Part 3: The raise. Your income grows about 2.5% a year, so next year you earn about $2,500 more. Your debt grows by your shortfall: $5,400, or 4.5%. Your debt is growing almost twice as fast as your paycheck.
Would you lend to this family? Lenders still do. They just charge more now. That’s what France’s 4.8% is telling you.
So what’s wrong with this household? Three things.
- You spend more than you earn. That alone isn’t fatal. Plenty of families borrow for a while.
- Your debt is growing faster than your income. This is the real problem. Each year you owe more for every dollar you earn, even if you change nothing.
- New loans cost more than your raises. Your loans reset at about 4.8%. Your income grows 2.5%. Each refinancing digs the hole a little deeper. That’s the snowball.
How much do you need to cut just to stop the slide? Not to pay anything off. Just to stand still.
Your income grows 2.5%. Your debt is $119,000. So 2.5% of $119,000, about $3,000, is the most you can borrow each year and still hold steady. You borrow $5,400. The gap is about $2,400 a year, or 2.4% of your income.
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Now Put France Back In
That household is France, with every number scaled to $100,000 of national income. France’s economy is about €3 trillion, roughly 30 million times bigger. So the $2,400 gap becomes about €70 billion (about $80 billion). Every year.
That’s the number behind France’s budget fights and fallen governments. The 2027 budget now in parliament proposes a €54 billion effort, and it still aims only to trim the deficit from 5.4% of GDP to 5.0%. And €70 billion isn’t austerity in the sense of paying down debt. It only stops things getting worse.
How The Neighbors Compare
Run the same checks on seven other big economies, each scaled to a $100,000 household. Two fail both: France and the United States.
| Per $100,000 of income, 2026 | Debt | Yearly shortfall | Income growth | Rate on new loans | Debt outgrowing income? | New loans cost more than raises? |
|---|---|---|---|---|---|---|
| France | $119k | $5.4k | 2.5% | 4.8% | Yes | Yes |
| United States | $126k | $7.5k | 4.9% | 5.2% | Yes | Yes |
| Germany | $65k | $3.8k | 3.5% | 3.5% | Yes | Even |
| United Kingdom | $104k | $3.9k | 3.9% | 5.4% | No, barely | Yes |
| Italy | $138k | $2.8k | 3.0% | 4.5% | No | Yes |
| Canada | $111k | $2.7k | 4.0% | 3.9% | No | No, barely |
| Spain | $98k | $2.1k | 4.6% | 4.1% | No | No |
| Japan | $204k | $2.0k | 2.9% | 3.0% | No | Yes, barely |
France and the US are not the same case. France’s new loans cost almost twice what its income grows. In the US the two numbers are close, and the US borrows in a currency it can print. France cannot print euros.
Japan owes the most and holds steady for now: its shortfall is small and its income is rising with inflation. Spain ate its vegetables after 2012, and now lenders charge it less than France. Italy’s debt is huge, but it has nearly closed its shortfall.
When Does It Start To Hurt?
Back to the household: its old loans keep rolling into dearer ones, a little each year, because France’s loans run about eight and a half years on average. The government’s own figures show the interest bill rising from about $2,600 this year to about $2,900 next year. Keep that pace and it nears $3,900 around 2030. That’s what Italy paid in 2024.
“But They Could Just Sell Something”
Fair point. And to be fair to France, our household isn’t broke. It owns savings and investments worth about $45,000: shares in companies, loans it has made, money in the bank. Count those at market value and its net debt is about $71,000. That’s close to Spain’s $75,000, and far better than Italy’s $123,000. Its neighbors, the French households, are also big savers. They hold about $249,000 in financial assets per $100,000 of national income, plenty to lend to their government.
So France is not about to go bust. But selling assets fixes this year, not every year. Sell a tenth of those savings and you raise $4,500. That covers the $2,400 gap for less than two years. Then the snowball starts again, minus the income those investments used to pay.
But what if it did go bust? Most investors have never pictured a rich country defaulting, so we did it for you. Using what the 2011 euro crisis did to stocks, the euro and Treasuries, we sized the worst case in our companion piece, Will France Default? The numbers are sobering. So are the odds against it.
What It Means For You
- Watch one number. France’s 10-year yield, about 4.8%, against its income growth, about 2.5%. While the yield sits above growth, the snowball grows. French bonds already trade worse than Italy’s. In the 2011 euro crisis, euro-zone stocks lost 36% in five months. See how past sell-offs compare in Market Crashes Compared.
- America now fails the same two tests. US debt grows faster than its income: it borrows about $7,500 per $100,000, and about $6,100 would hold it steady. And its 10-year yield, about 5.25%, has moved above its income growth of about 4.9%. The margin is thin, and the US can print its own currency, so its risk is inflation, not default. Related: $38 Trillion U.S. Debt: Too Big To Go Broke?
- Use the same test on any borrower. A company, a city, or your own family. Is debt growing faster than income? Do new loans cost more than income grows? Two yeses mean the problem compounds on its own.
The Verdict
France has a flow problem more than a solvency problem, and the clock is running.
Its net debt looks like Spain’s, so default talk runs ahead of the numbers. But France’s debt outgrows its income, and new loans cost almost twice what its income grows. Unless it finds about €70 billion a year, the debt keeps climbing and the interest bill nears Italy’s level around 2030. Selling assets buys a year or two, not a fix.
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