State Deficit: €106.8 Billion in the First Half, France Drives the Point Home

After me, the deluge. The phrase attributed to Louis XV reflects the current French budget management: spend now, settle the bill later.

The Ministry of Action and Public Accounts published the state budget figures as of the end of June 2026 on August 4: a deficit of €106.8 billion for the first six months of the year, compared to €100.4 billion during the same period in 2025. This represents a deterioration of €6.4 billion, or +6.4% year-on-year.

Key points of this article:

• France's budget deficit reached €106.8 billion in the first half of 2026, an increase of 6.4% compared to the previous year.
• The cost of French public debt has surpassed defense spending, marking a worrying and unprecedented budgetary trend.

A growing hole despite announced cuts

The paradox is evident: Bercy has made numerous announcements of savings in recent months, including €3 billion in additional credits frozen in July. Yet two pincers are closing simultaneously.

On one hand, growth has been revised down to 0.7% for 2026. On the other, tax revenues are not keeping pace with the projections set by the finance law, a classic phenomenon during economic slowdowns where every tenth of a percentage point less in growth directly impacts VAT and corporate tax revenues.

Moreover, the Court of Auditors had already warned at the end of June: the goal of a public deficit of 5% of GDP for 2026 remained far from guaranteed. The figures for the first half of the year tend to support this rather than contradict it.

The burden of debt now exceeds the defense budget

One figure summarizes better than any other the ongoing budgetary shift. According to the Senate, the debt burden is estimated at €59 billion for 2026, an increase of €4.4 billion year-on-year. This amount exceeds the defense budget excluding pensions, which itself has risen by €6.7 billion to €57.1 billion.

Paying the interest on the debt now costs the state more than funding its military, an unprecedented shift that makes interest the largest sovereign expenditure item in the country.

79% of the annual target already reached in six months

The 2026 finance law, enacted on February 19 after a use of 49.3, anticipates a state deficit of €134.6 billion for the entire year. With €106.8 billion reached by the end of June, nearly 79% of this envelope has already been consumed while half of the fiscal year remains.

The overall budget trajectory is not more reassuring: the public deficit, initially set at 4.7% of GDP in the draft law, has been revised to 5%, an increase of €9 billion, a deterioration that, according to Public Sénat, stems exclusively from rising public spending rather than a lack of revenues.

This deficit adds to a public debt that has already surpassed 117.5% of GDP, a level where the apparent debt rate now exceeds GDP growth, a snowball effect not seen since the health crisis. The yield on 10-year OATs, the benchmark for French state borrowing, hovered around 3.75% in mid-2026, making each new bond issuance more expensive compared to the previous one, and half of the budgetary exercise has not yet elapsed.

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