France in Deep Crisis: National Debt Hits €3.345 Trillion Amid Political Turmoil and Economic Mismanagement

France in Deep Crisis: National Debt Hits €3.345 Trillion Amid Political Turmoil and Economic Mismanagement

✍️ BY: Dr. Hana Saada

Algiers, Algeria | France is sinking deeper into an unprecedented crisis — political, economic, and social — as its national debt surges to the staggering figure of €3.3458 trillion. With indicators flashing red across the board, the nation faces a perfect storm of fiscal collapse, political instability, and social unrest.

The crisis has been spiraling since 9 June 2024, when President Emmanuel Macron dissolved the National Assembly, triggering a volatile political climate that analysts warn will reach its apex in September 2025. In a landscape dominated by an increasingly hostile far-right discourse toward Algeria, one voice of dissent has stood out — former French minister Ségolène Royal.

In a statement published on social media, Royal condemned Macron’s recent instructions to his Prime Minister to adopt “greater firmness” toward Algeria as nothing more than a calculated distraction. She accused the government of exploiting diplomatic tensions to divert attention from pressing domestic failures, notably the devastating wildfires in Aude and the chronic underfunding of France’s civil protection services.

Royal’s warning is stark: France is heading into a “high-risk” social rentrée without the structural reforms needed to avert another wave of mass unrest. Her assessment is echoed by economists who see the political crisis as intertwined with an alarming fiscal reality.

Debt Crisis at Record Levels

According to official data, France’s public debt soared by €40.51 billion in just one quarter (+1.2%), setting a historic record in Q1 2025. Since early 2020, debt has ballooned by €958.4 billion, while the country’s nominal GDP rose by only €500.8 billion. The €457.6 billion shortfall is, in the words of one analyst, “a state scandal of the highest order.”

This fiscal deterioration is coupled with a rise in 10-year government bond yields to over 3.4% as of 11 July 2025 — a figure expected to climb further if France’s sovereign credit rating drops to a single “A” in the coming months. The looming downgrade could trigger a capital flight, compounding the crisis.

Economic Ties with Algeria — A Strategic Vulnerability

Paris knows full well that the Algerian market remains vital to more than 450 French companies employing 40,000 people directly. Any rupture in economic relations could jeopardize up to 126,000 jobs, pushing 220,000 households into economic hardship. Algeria’s diversification of its international partnerships has already weakened France’s economic grip, and the use of diplomatic tension as a bargaining chip is a gamble Paris can ill afford.

Political Gamble Backfires

Public sentiment paints a grim picture. A June 2025 Odoxa poll reveals that nearly all French citizens are pessimistic about their country’s economic future, with the economic confidence index languishing between -50 and -70 for the past two years. Three-quarters of respondents view Macron’s dissolution of the Assembly as an “economic catastrophe” that has strengthened the far-right’s influence and hardened post-election government policy.

As France edges toward the 2027 presidential race, political actors are increasingly scapegoating Algeria to rally voter support. But this tactic — built on misdirection rather than solutions — is a losing bet in the face of structural fiscal decay and deepening public disillusionment.

If the government fails to present a credible 2026 budget in September, France could be propelled into a full-blown political and economic storm, with consequences that would ripple far beyond its borders.

Translated from: Horizons.dz

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