UBS CEO Sergio Ermotti says France needs hard measures to address worsening debt.
Why it matters: France's rising debt and persistent budget deficit could increase refinancing costs for the government and pressure banks, companies and neighboring euro-area borrowers. The available sources support a fiscal-risk outlook, but do not establish that France alone caused the euro's decline or wider bond-market moves.
- France's public debt reached €3.5955 trillion, or 119.0% of GDP, at the end of Q2 2026.
- The European Commission projects a 5.7% deficit in 2027 and debt above 120% of GDP under unchanged policies.
- Interest payments are projected to rise to 2.6% of GDP in 2026 and 2.8% in 2027.
UBS Group CEO Sergio Ermotti said France needs "hard measures" to address its worsening debt position in an October 6 interview with CNBC. The interview did not specify which measures he meant.
France's public debt reached €3.5955 trillion, or 119.0% of GDP, at the end of the second quarter of 2026, up from 117.5% in the first quarter, according to INSEE.
The country recorded a 5.1% deficit in 2025. The European Commission expects the deficit to remain at 5.1% in 2026 and rise to 5.7% in 2027 under unchanged policies. It projects debt above 120% of GDP in 2027.
Interest payments are projected to rise to 2.6% of GDP in 2026 and 2.8% in 2027, according to the European Commission. Higher interest costs can leave less room for public spending and make it harder to reduce the deficit.
That creates a potential financing feedback loop: higher borrowing costs increase the expense of refinancing maturing debt, which can widen the deficit and lead investors to demand a larger risk premium, or extra compensation for holding the debt.
The Banque de France identifies a wider transmission risk. Sovereign stress can spread through banks, companies and neighboring government-bond markets. The European Central Bank has tools intended to limit disorderly fragmentation, meaning damaging divergence in borrowing costs across euro-area countries, but those tools do not replace credible fiscal adjustment.
By the numbers
- €3.5955 trillion - France's public debt at the end of Q2 2026
- 119.0% - France's debt-to-GDP ratio at the end of Q2 2026
- 2.6% and 2.8% - projected interest payments as a share of GDP in 2026 and 2027
Yes, but: The Commission's debt and deficit projections assume unchanged policies. They are forecasts, not evidence that the projected outcomes are certain.