France is running out of other people’s money, and the euro makes it your problem

The French state takes more of the economy than any other in the EU: 57.2% of GDP in 2025. For that money, the staff of a lycée in Créteil went on strike in September because nobody replaces absent teachers. The pupils blocked the gates on 21 September. A week later it was a national movement.

So before the debt, hold that picture. The most expensive state in Europe is being picketed by teenagers because it can’t staff a classroom. Then look at what it owes.

Every figure below has a source at the bottom. Where something is a forecast, a draft or my opinion, it says so.

What is happening on the street#

This did not start as a protest against the budget, and it did not start at the universities. It started at school gates, over teacher replacement, class sizes and buildings. The budget poured fuel on it: on 1 October the government tabled its 2027 finance bill, which cuts 1,588 teaching posts because pupil numbers are falling.

The prime minister’s office says a far-left party is steering the blockades; the party denies it. I can’t check that and won’t pretend to. What I can check is the calendar: the budget debate opens in the National Assembly on 14 October, the government has no majority, and the Socialist leader calls a no-confidence vote likely.

You’ve seen this film. 1.28 million people marched against the pension reform on 7 March 2023, by the interior ministry’s own count. The reform passed without a vote, by article 49.3. In December 2025 parliament froze it: the retirement age stays at 62 years and 9 months until January 2028. The street won, the bill went to the bond market.

The bill so far#

A word on fairness, because the numbers don’t need help. Yields are up everywhere this year: there is a war in the Middle East, oil above $100 and euro-area inflation at 3.8%. The ECB has been raising rates since June. The German Bund pays about 3.5%. What is French about the French problem is the gap: lenders ask Paris for 1.3 points more than Berlin, and more than they ask Rome or Athens. Fifteen years ago Greece was the patient and France sat on the committee that wrote the prescription.

The last French budget in balance was 1974. Since the euro started in 1999, France has broken the 3% deficit limit in 20 of 27 years. No fine was ever paid. In 2016 the Commission president was asked why France kept getting more time. His answer, on French television: “Because it is France.”

Promised and delivered#

The last two rows come from one table in the government’s own bill, which prints the old promise next to the new plan. Thirteen and a half points of GDP between the two debt figures is roughly €400 billion. That’s the distance between a French four-year plan and its result.

One more number, my favourite in the whole file. In 2025 France introduced a 20% minimum tax on high incomes and booked €2.0 billion for it. It raised €0.4 billion. The audit court’s explanation: the taxpayers adapted. People who earn above €250,000 own calculators too.

My read#

France doesn’t have a revenue problem. No state in Europe collects more. It has a state that spends 57% of what the country produces, delivers blocked schools for it, and has not balanced a budget in 52 years. Every government in that half-century promised to fix it and each left more debt than it found.

And nobody is in a position to fix it now. The parliament elected in 2024 has no majority for anything except stopping things. It stopped the pension reform. Presidential elections come on 18 April and 2 May 2027; an Ifop poll of late September has Marine Le Pen first at 32%, Édouard Philippe at 16% and Jean-Luc Mélenchon at 15%. Le Pen wants the retirement age back at 62. Mélenchon wants 60, the wealth tax back, a wider exit tax and a tax that follows French citizens abroad. Philippe offers 65 and has half the leader’s score.

So the choice in April is between two ways of spending more and one way of being outvoted. France spends 14.1% of GDP on pensions already. That sum doesn’t care who wins.

The scenario nobody prints: what if rates stay#

For Germany we had to move the interest rate to make the budget break. For France you don’t need to move anything. You only need today’s rates to stay.

The inputs:

• Public debt at the end of June 2026: €3,595.5bn. Central state: €2,942.1bn.
• Average interest the public sector pays on the whole stock in 2026: about 2.2% (our division: €77.4bn by the €3,460bn owed at the start of the year). The old bonds from the zero-rate years are still in there. Average maturity: 8 years and 142 days.
• Average rate on bonds sold in 2026 so far: 3.55%. Ten-year yield on 7 October: about 4.8%.
• State revenue in the 2027 bill: €375.7bn net taxes, of which income tax €102.5bn, the state’s share of VAT €107.0bn, corporate tax €58.5bn.

Step one, no scenario at all. Once the whole stock has rolled over at this year’s average issue rate of 3.55%, the debt costs €127.6bn a year instead of €77.4bn. That’s €50bn more, half of all income tax, without one further rate rise and without one further euro of debt. France adds about €150bn of debt a year.

Step two, move the rate.

Our arithmetic, not a forecast. It’s static: today’s debt, no new borrowing, no growth in revenue, and the full effect only arrives as old bonds mature. The audit court’s own sensitivity table says the same thing more slowly: a lasting rise of half a point costs the state €1.5bn in the first year and €16bn in the tenth.

Now the other way round, for the central state alone. What average rate on its €2,942bn eats which share of its tax revenue?

Read the second row. A quarter of all state taxes going to bondholders takes an average rate of 3.2%. This year’s new bonds went out at 3.55%.

And who are the bondholders? Non-residents hold 57.5% of French state debt, up from 49.8% at the end of 2022. Foreign pension funds and central banks don’t march on 5 November. They sell.

My read#

In August 2025 the then finance minister was asked on the radio whether the IMF could end up in Paris. He said he couldn’t tell listeners the risk didn’t exist. On 5 October 2026 the governor of the Banque de France told the Financial Times that France could be gradually strangled by its interest bill, and called ECB help premature. These are the officials. I have nothing to add to their vocabulary.

Today France sells its bonds without trouble: auctions are covered two and a half times. That’s a fact about today. Greece sold bonds without trouble in 2009.

I’m not giving you a date. I think a French debt crisis, in whatever polite form it arrives, is on the cards, and the table above is why. Moody’s reviews its rating on 23 October, with a negative outlook. S&P follows on 27 November.

Why it’s your problem in Munich, Vienna or Utrecht#

If France had its own currency, this would be a French story: the franc would fall, French savers would pay through inflation, and the rest of us would get cheaper holidays. That exit is closed. So the bill travels through the plumbing, and the plumbing has your name on it.

France is too big for the bailout fund and it co-owns the fund. That leaves the ECB. The ECB’s emergency programme was built for exactly this, its conditions are a matter of the governing council’s “discretion”, and the governing council has never let a large member go.

So here is how a French crisis reaches someone who has never owned a French bond. The ECB buys, and the euro buys less. Or the EU borrows jointly again, and your country repays its share until 2058. Or neither is enough, and France does what the next section lists, to anyone with assets inside its reach. The first two don’t need your signature.

The market has kept its own score on this currency. Since January 1999 the euro has lost 45% of its purchasing power, and 21.5% since the end of 2019 alone. One euro bought 1.62 Swiss francs at the start. On 7 October 2026 it bought 0.93.

A group of governments that borrow together, have broken their own deficit rule for 27 years and never fined each other is not a stability union. It’s a table of gamblers sharing one line of credit, and the one with the worst hand is too big to send home.

What states did the last times#

A state that can’t pay doesn’t close. It collects. France has a longer record than most:

• 1936, the gold. The franc was devalued by about 29%. Private holders had to declare their gold, and the state taxed away the gain.
• 1939 to 1989, the border. Exchange controls came in by decree in September 1939 and stayed, with breaks, for fifty years.
• 1945, the wealth. The “national solidarity tax”: a one-off levy of up to 20% on assets and up to 100% on wealth gained during the war.
• 1983, the holiday and the loan. In March, French residents were limited to 2,000 francs of foreign currency per adult per year for travel, recorded in a booklet. In April came a compulsory loan: 10% of your tax bill if you paid more than 5,000 francs. This was a Western European democracy, 43 years ago, under a president elected on a spending programme.
• Italy, 1992. In the night of 9 to 10 July, the government took 0.6% of every bank deposit by decree.
• Ireland, 2011 to 2015. A yearly levy of 0.6% on private pension funds.
• Cyprus, 2013. The first plan, agreed with the euro group, taxed insured deposits under €100,000 at 6.75%. Parliament refused. The second plan converted 47.5% of uninsured deposits at Bank of Cyprus into shares. Capital controls lasted two years.
• Poland, 2014. Half of the private pension funds’ assets were moved to the state in one day.

None of that is a prediction. It’s the menu. Now the tools that are already in the French drawer:

• The life-insurance freeze. Since the “Sapin 2” law of 2016, a state council can limit withdrawals from life-insurance contracts for up to six months. The French keep over €2,000bn there. Never used, fully legal.
• The 2027 bill, article 23. A one-off levy of 17% on dormant accounts and unclaimed life-insurance money held at the state’s deposit bank. €1.4bn. Small, and it tells you which direction the hand moves.
• The 2027 bill, article 5. Tightens a deferral that founders use when they contribute shares to a holding, and the matching exit-tax deferral for people who have left. It applies from 1 October 2026: the day the bill was tabled, before parliament had voted on a line of it.
• The tax that follows you. In October 2025 the National Assembly voted on a “targeted universal tax” for French citizens who move to low-tax countries. It failed by 131 votes to 132.

One vote.

Who has already left#

Less than you’d think, and I’m not going to invent a stampede. I found no list of named founders who left France this year. The foreign ministry counts 1.78 million French citizens registered abroad, up 1.7% in a year; registration is voluntary. A study for the prime minister’s economic council found that 0.2% of the top capital earners leave per year.

The interesting departure is a different one. That minimum tax which raised a fifth of its target shows the base moving without anyone moving house: income gets deferred, restructured, realised elsewhere. The state then answers with the next rule, and article 5 is that answer. The door closes a bit at a time, and each time on the day of the announcement.

What to do while it’s a calculation#

You don’t have to live in France for this to concern you. If you hold euros in a euro-area bank, own a company in the euro area or expect a pension from a euro-area state, you’re at the table.

Know your own exit bill. Every country taxes leavers differently, and several tightened the rules recently:

Run the number before the next budget night, not after. France just showed how fast “from today” arrives.

Don’t keep everything in one legal reach. A euro account in France and a euro account in Germany are in the same currency and under the same bail-in rules: deposits above €100,000 can be converted in a bank rescue. A second bank relationship outside the euro area, declared and reported under CRS like any other, is plumbing, not secrecy. How it works: offshore banking.

Have a second place you’re allowed to live. A residence permit you’ve never used is cheap. The easiest residency permits compares the options; Switzerland, the UAE, Cyprus and Italy with its flat tax are where people with a calculator tend to end up. Our Jurisdiction Finder sorts them by what matters to you.

If you’re French, mind the clock. The two-year rule cancels the exit tax on most departures inside the EU, and it’s current law, not a promise. A parliament that missed a citizenship-based tax by one vote will try again.

The ballot changes the faces#

In April the French pick a new president. Whoever it is inherits €3.6 trillion of debt, an interest bill that grows by ten billion a year, a parliament without a majority and pupils outside the gates. I don’t think any of the three front-runners cuts spending, because none of them is promising to.

So I expect the bill to go where it always went: to the currency, to the neighbours, and to whoever still has assets inside the border on the day of the announcement. Two of those three reach you wherever in the euro area you live.

Sources#

• INSEE – public debt at the end of Q2 2026 (29 September 2026)
• INSEE – public debt, long series
• INSEE – national accounts 2025, deficit and debt
• INSEE – quarterly GDP
• INSEE – unemployment, Q2 2026
• Assemblée nationale – 2027 finance bill, no. 3210 (tabled 1 October 2026)
• Légifrance – 2026 finance law, no. 2026-103 of 19 February 2026
• Agence France Trésor – state budget and financing programme
• Agence France Trésor – key debt figures (maturity, holders)
• Agence France Trésor – France’s credit ratings and review calendar
• Cour des comptes – public finances report, June 2026
• Sénat – report on the stability programme and the programming law 2023–27
• iFRAP – fifty years of deficits (last balanced budget: 1974)
• Conseil d’orientation des retraites – annual report 2026, summary
• IMF – France, 2026 Article IV consultation (22 July 2026)
• Reuters via Boursorama – OAT yield at its highest since 2002 (1 October 2026)
• Boursorama – sovereign yields
• Banque de France – OAT reference rates, 6 June 2024
• France 24 – “Act 3” of the school movement, turnout figures (6 October 2026)
• Franceinfo – arrests and disrupted schools, ministers’ figures (2 October 2026)
• Public Sénat – what the 2027 budget plans for education
• AEF info – strike rates in the civil service, 29 September 2026
• AEF info – unions call a cross-sector day on 5 November 2026
• Franceinfo – how the government wants to pass the 2027 budget
• Polls for the 2027 presidential election, list by institute
• Franceinfo – the “targeted universal tax” rejected by one vote (October 2025)
• Économie Matin – the finance minister on the risk of an IMF intervention (26 August 2025)
• Orange Actu – the Banque de France governor on rising interest (5 October 2026)
• Le Monde du Droit – the power to limit life-insurance withdrawals (art. L631-2-1 of the monetary code)
• Ministry for Europe and Foreign Affairs – report on French citizens abroad
• Conseil d’analyse économique – Focus 118 on tax emigration (July 2025)
• Eurostat – deficit and debt 2025 (April 2026 notification)
• Eurostat – flash inflation, September 2026
• Eurostat – government deficit since 1999 (data)
• Eurostat – consumer price index since 1999 (data)
• Council of the EU – assessment of France under the deficit procedure (June 2026)
• Cyprus Mail / Reuters Breakingviews – “because it is France”
• ECB – key interest rates
• ECB – Transmission Protection Instrument, press release of 21 July 2022
• ECB – press conference of 11 September 2025
• ECB – public sector purchase programme, holdings by country
• ECB – pandemic emergency purchase programme
• ECB data – TARGET balances, Germany
• ECB data – euro reference rate, Swiss franc
• ESM – capital keys and subscriptions (January 2026)
• ESM – total loans to Greece
• Austrian Parliament budget office – euro-area stabilisation measures, Q1 2026
• European Commission – EU bond issuance, September 2026
• EU Own Resources Decision 2020/2053
• Eunews – Court of Auditors on the interest cost of the recovery fund
• European Court of Auditors – overview of the 2028–2034 budget proposal
• German Federal Government – statement of six member states on the EU budget (27 August 2026)
• European Banking Authority – deposit guarantee scheme data 2015–2025
• Bank Recovery and Resolution Directive 2014/59/EU
• Hérodote – the franc devaluation of 1936
• Exchange controls in France, 1939 to 1989
• World Inequality Database – the French national solidarity levy of 1945
• Universalis – the austerity plan of March 1983
• Pagella Politica – Italy’s deposit levy of 1992
• Oireachtas – Ireland’s pension fund levy
• Journal of Financial Crises (Yale) – Cyprus 2013
• Bankier.pl – the transfer of Polish pension fund assets, 2014
• KPMG – Belgium’s capital gains tax and exit charge (2026)
• German Investment Tax Act, § 19