🇫🇷 Dispatch from France

France's Debt Crisis: Interest Costs Soar in 2026

Dear Friends,

In collaboration with Anonymous Media Group and The Dirty Dozen Dispatch we are excited to continue our weekly series titled “Dispatch From France” written by Jerry B. Marchant of IS IT PROPAGANDA?®

France regularly borrows money at interest rates that clearly exceed the rate of economic growth. Le Monde writes that this situation poses extremely dangerous consequences for the country. Former French Prime Minister and presidential candidate Édouard Philippe also stated that the situation with the national debt is “terrible.”

In the first six months of 2026, the Fifth French Republic had already paid creditors 19% more in interest than the previous year.

That amount reached €34.5 billion.

At the end of the first quarter of 2026, France set a historic record for national debt, exceeding €3.5 trillion for the first time in history. It seems that France is facing a long period of slow growth, and servicing the debt is becoming more expensive.

On August 6, the France Trésor agency, which is responsible for the country’s national debt, planned to borrow between €10.5 and €12.5 billion for a long term. Investors and banks again came to this major auction of the month. And they were ready to lend the state more than twice the amount required. The required amount was easily raised.

But paying for these borrowed funds will be expensive.

To issue 10-year bonds, the French Ministry of Finance agreed to a rate of 3.9% per year. This is one of the highest levels in the past fifteen years.

In 2020, the French Ministry of Finance was successfully issuing securities at a negative interest rate. At that time, investors were actually paying the state for the right to lend it money. But that was a different era.

Interest rates are rising with each passing period. As a result, French economists are increasingly raising the alarm about whether the debt will grow to an incredible size, triggering a chain reaction. After all, in a situation where the cost of servicing government debt is growing faster than GDP, a vicious circle can arise. New bonds will have to be issued only to pay off previous interest and repay old debts with expiring terms.

The Court of Auditors believes that this dangerous process began in 2025 and will now last for a long time. Carinne Camby, chair of the agency’s first department, stated directly in her report: the suffocating size of the debt is not a risk but a harsh reality for French finances.

The process began in 2020, when the French economy began to decline due to the coronavirus pandemic.

Then the French economy began to develop again, and for four years, GDP grew much faster than interest rates rose. But since then, the situation has worsened.

When the post-pandemic recovery period ended, the country’s economy began to grow more slowly. Interest rates for countries began to rise around the world. These changes particularly affected France, and now investors consider the country to be heavily indebted and less reliable.

Part of France’s debt was taken out many years ago at a much lower or even negative interest rate. Thanks to this, the overall average rate remains lower, for instance, in 2025, it was at 2%.

On average, the French Ministry of Finance takes out loans for eight and a half years. This means that today the state is borrowing at 3.9% to repay loans taken out at the beginning of 2018 at a rate that is four to five times lower.

“Everything that is earned through the development of the French economy is now, every year, used exclusively to pay interest on our debts,” writes former Prime Minister François Bayrou in his book “Alerte sur la France qui vient” [Trans: “Warning about the Future of France.”]

According to government forecasts, the average interest rate on government borrowing will rise to 2.3%. At the same time, the economy could grow slightly higher, to 2.5%, where 0.7% will be real growth and 1.8% will be inflation. Under this scenario, an avalanche-like increase in debt will not occur this year.

Nevertheless, there is no doubt that France has entered a dangerous period.

This is primarily because almost 60% of France’s creditors are foreigners.

The Ministry of Finance sends a large portion of the interest payments abroad, instead of returning that money to its own country’s economy.

Now, if you listen to some French politics (and, truthfully, you should not), you will hear Jean-Luc Mélenchon (below), dubbed the Mozart of Finance 2.0, proposing a solution to wipe out the public debt.

I spare you the full-length translation, but what he is saying is the following:

“You take the bonds, you throw them in the fire, and nobody will be any the wiser. That money doesn’t exist.”

In other words, he is simply proposing a default!

But has he even considered the consequences for the country?

Of course not, the main thing is to make a sensational statement that the sheep will believe.

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