The climate-fiscal timebomb: France

Fiscal outlook

France recorded a 5.8% deficit and a debt-to-GDP ratio of 113.2% in 2024. The country is under an Excessive Debt Procedure, with the Council of the European Union adopting the recommendation to put an end to its excessive deficit by 2029 in January 2025. France’s fiscal debate is now inseparable from politics: in early September 2025, Prime Minister François Bayrou’s minority government fell after a no-confidence vote triggered by a controversial €44bn consolidation package. President Emmanuel Macron appointed Sébastien Lecornu to lead a fragile new majority under highly divided conditions. French public debt was already at ~114% of GDP as of Q1 2025.

Deficit measures the level of borrowing in a given year. Debt-to-GDP compares the total public debt to the size of the economy. Both are currently used to determine how much borrowing a member state is allowed to undertake. However, neither measure in itself determines a government’s capacity to sustain higher levels of public investment. Fiscal sustainability depends on growth, the multiplier effects of investment, interest rates, inflation, the structure of the economy and external risks such as climate change. NEF advocates moving away from strict numerical debt targets.

Rising climate costs

The 2022 – 25 heatwaves and wildfires inflicted combined losses exceeding €10bn, and the 2025 summer again broke temperature records. In 2024, heat exposure resulted in a loss of 90m potential labour hours, 111% more than in 1990 – 1999. The construction sector accounted for 47% of the losses in 2024. In 2024, 656 deaths were attributed to wildfire smoke, still 45% higher than the baseline, highlighting persistent health risks even in years with fewer fire events. The agricultural sector has come under pressure due to excessive heat and heavy rainfall. France is one of the countries likely to experience the largest absolute increase in crop losses, at around 64% annually.

What NEF’s modelling shows

Organisation for Economic Co-operation and Development (OECD) projections show France’s GDP declining by 11% by 2050 and 16% by 2070 under current policies. Our modelling shows the following:

• Under current policies (BAU – business as usual), France’s debt is 84 pps higher than the baseline in 2050 and 268 pps higher in 2070.

• With early EU mitigation and sufficient adaptation spending, debt is 39 pps higher in 2050 and 72 pps in 2070.

• Delayed EU investments and insufficient adaptation results in higher debt levels of 59 pps in 2050 and 114 pps in 2070.

• EU early action combined with global cooperation results in 3 pps lower debt levels than the climate-agnostic baseline in 2050 and 28 pps lower levels in 2070.

• Progressive taxation, such as a wealth tax, combined with EU early action would reduce debt by 10 pps in 2050 by 31 pps in 2070 compared to the climate-agnostic baseline.

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