The Public Finance in Europe – Structural Developments in France
The Public Finance in Europe – Structural Developments in France

Author(s): Andrei Rădulescu
Subject(s): Economy, Public Finances
Published by: Институт за икономически изследвания при Българска академия на науките
Summary/Abstract: France (the second-largest economy of the European Union and of Euroland) has recently been confronted with the severe deterioration of public finance. In terms of the budget deficit/GDP ratio, France ranked first in Euroland and third in the EU during 2Q 2025 (Eurostat, 2025). The financial markets have penalized France with higher borrowing costs, as the yield on 10-year bonds has been above the Eurozone average since June 2024. Furthermore, in July 2025, France paid the same interest rate as Greece on the 10-year Government bonds for the first time in history (Eurostat, 2025). These developments and the weak growth pace of the economy (below 1% Y/Y over the past quarters) determined the increase of the public debt/GDP ratio to a record high level, above 115% in 2Q 2025, the third largest level in the EU (Eurostat, 2025). In this paper, standard econometric tools are employed, and the Eurostat database is utilized to analyze the structural developments in public finance in France and Germany from 2002 to 2025. Our results point out the divergence in terms of the structural component of the budget deficit between France and Germany in recent years, leading to the widening of the gap in terms of public debt/GDP ratio to over 50pps.

• Details
• Contents