France faces debt rise without spending cuts, pension reform, OECD says

France's substantial debt is at risk of increasing further unless the government implements more significant spending cuts and reinstates stalled pension reforms, the OECD reported. The organization stated that France's fiscal position is strained, with the deficit expected to hover around 5% of GDP in 2026 and public debt projected to approach 119% of output.

To stabilize debt in the coming years, the OECD advised that France would require a cumulative fiscal consolidation effort equivalent to three percentage points of GDP by 2030, exceeding any measures currently in place. With a presidential election scheduled for April 2027, future administrations will need to address France's public spending, which remains considerably higher than that of its economic peers.

A key component of any strategy to regain fiscal control involves resuming the 2023 pension reform, which gradually raises the retirement age to 64 from 62. This reform was paused last year until after the upcoming election. The OECD urged the government to proceed with the overhaul as planned and eventually tie the retirement age to life expectancy, a potentially contentious proposal in a country that has seen significant strikes and protests over pension adjustments.

Without these changes, escalating pension and healthcare expenditures will continue to pressure already strained public finances, exacerbated by higher interest rates increasing borrowing costs, the OECD noted. This warning comes amid a weakening economic outlook, with France's economy predicted to slow to 0.7% in 2026 from 0.9% in 2025, before a slight increase to 0.8% in 2027, attributed to persistent political uncertainty, elevated interest rates, and external shocks. Subdued economic growth will complicate deficit reduction efforts, especially as increased interest payments on debt limit fiscal maneuverability. While exports and a robust labor market have offered some support, consumption and investment remain fragile, according to the OECD.