France risks a slow economic “suffocation” unless it addresses its persistent budget and debt problems, the governor of the Bank of France, Francois Villeroy de Galhau, warned in an interview with La Croix on Saturday.
Villeroy de Galhau highlighted a “serious budgetary problem,” noting that the government deficit remains high at 5.4% of GDP in 2025, only marginally improved from 5.8% last year. He emphasized that the shortfall must be reduced to 3% by 2029 to restore fiscal credibility.
“Our country is not threatened with bankruptcy, but with gradual suffocation,” the governor said, warning that debt-servicing costs are projected to rise from €30 billion in 2020 to over €100 billion by the end of the decade. He added that higher interest rates are already increasing borrowing costs for households and businesses, diverting funds from priorities such as defense and the green transition.
Villeroy de Galhau also raised concerns about the burden on future generations: “Finally, and above all, it is an increasingly heavy debt that we are leaving to our children and grandchildren.” France’s public debt currently stands at €3.3 trillion ($3.9 trillion), equivalent to roughly 115% of GDP.
The governor’s remarks follow Moody’s recent downgrade of France’s sovereign outlook from stable to negative, citing political “fragmentation” that could hinder effective policymaking. Earlier in 2025, both Fitch Ratings and S&P Global Ratings downgraded France’s credit rating to A+, also flagging fiscal and political risks. Villeroy de Galhau noted that Moody’s remains the only major agency still granting France a double-A rating, “a sign that the country retains strengths, even if the outlook is negative.”
Despite the challenges, the governor maintained a forecast of modest growth of around 0.7% in 2025. He highlighted France’s labor market performance, saying the country remains “the major European country that has created the most jobs over the past ten years,” with current unemployment at about 7.5%.
