The budgetary episode in France is over for 2026, but the battle is not over because long-standing questions have not been answered. 

1- Stabilizing the public debt-to-GDP ratio. 

A few months ago, the discussion focused on this point. Calculations at the time showed the need for a primary surplus within a finite timeframe to achieve this. The budgetary effort would then amount to approximately 150 billion euros to be saved and redistributed over the desired period. The faster the desired stabilization of the ratio, the greater the effort required. 

This stabilization is essential because it will determine the French economy’s capacity to withstand shocks and correct its imbalances. Public debt cannot be a permanent escape route. This issue, which was once minor, is no longer so given the level of indebtedness. It will also raise the question of the trade-off between capital accumulation to renew growth and the accumulation of this public debt.

2- The public debt to GDP ratio in France is a straight line whose starting point was around 20% in 1975. 

Since then, the debt has only increased, reflecting an imbalance between the social model, which requires strong growth, and the French economy’s capacity to deliver it. Trend growth in France was 2% from the first oil shock until the Great Recession. Today, it is slightly above 1%. Even though efforts are being made to reduce social spending, the cuts are insufficient due to the decline in the growth rate. This trade-off has not been made, as the social security deficit, projected to reach €20 billion in 2026, is resulting in investor distrust regarding the financing of social security accounts. 

3- The distribution of expenses between young people and retirees. This arrangement favoring pensions is not sustainable in the long term, since the income used to pay pensions comes from the work of the active population. Young workers must be incentivized to work in order to adequately finance the pay-as-you-go pension system. 

I mention these three aspects because they are crucial for the long-term balance of the French economy. 

These issues were not addressed in this year’s budget, and they will not be addressed in next year’s budget either. The 2027 presidential elections will dictate all considerations and choices. It is inconceivable that a candidate could be elected on a platform of fiscal austerity. For so long, public debt has been the most effective way to address imbalances, so why stop now?

This means that the first rigorous budget will not be implemented until 2028 at the earliest. The strategy of converging towards a deficit of 3% of GDP by 2029 is therefore rendered obsolete.