IIF Views on Europe: France — The Fiscal Adjustment Gets Harder

About this work

Marcello Estevão, Ugras Ulku, Jonathan Fortun and Fatima Zahoor ask how France can pursue fiscal adjustment while still funding growth. They find that revenue losses explained the deficit's worsening after 2017, whereas underlying spending pressures have mattered most since crisis support ended. Because taxes are already high, they argue for pension and public service reform, better coordination across levels of government, and spending reviews that shield vulnerable households. In their baseline, higher refinancing costs and political risk premia keep debt rising despite a large primary adjustment, from 118% of GDP in 2026 to nearly 124% by 2031. Stronger adjustment, growth and cheaper financing could reverse that path.