• Jupiter's Ariel Bezalel warns France's rising debt and political gridlock echo Greece's pre-crisis trajectory.
  • French public debt hit 117.5% of GDP in Q1 2026 and is projected to climb further, while the OAT-Bund spread has widened past 100 basis points.
  • The government's proposed €54 billion savings plan for the 2027 budget faces an uncertain path through a fragmented parliament.

France is not facing an imminent Greek-style sovereign-debt crisis, but the warning is increasingly about a feedback loop: large deficits lift debt and borrowing costs, while a fragmented parliament makes the corrective measures investors want politically difficult. The immediate focal point is the 2027 budget, which the government says will contain €54 billion of savings amid heightened market pressure and public opposition to austerity.

"The trajectory is reminiscent of Greece before the crisis," said Ariel Bezalel, fund manager at Jupiter Asset Management, in a note to clients this week. "It's not about a sudden stop, but a slow grind of rising debt and political paralysis that erodes credibility."

Official data put French Maastricht public debt at €3.536 trillion, or 117.5% of GDP, at the end of the first quarter of 2026—up from 115.7% at the end of 2025. The Finance Ministry now expects debt to rise to 119.3% of GDP in 2026 and 121.7% in 2027. The 2025 deficit narrowed to 5.1% of GDP from 5.8% in 2024, but remains well above the EU's 3% reference value.

Investors have taken notice. The premium investors demand to hold French 10-year government bonds over German bunds rose above 100 basis points in September, its highest level since the euro-area debt crisis. This so-called OAT-Bund spread is a risk premium, not a sign that France has lost market access. Still, it raises refinancing costs and signals that investors want more compensation to hold French debt.

Rating agencies have also flagged concerns. Scope cut France to A+ from AA-, while Fitch has kept France at A+ with a stable outlook but identifies rising debt, persistent deficits, weak potential growth, and political fragmentation as central risks. Fitch expects deficits of 5.2% of GDP in 2026, 5.5% in 2027, and 5.2% in 2028, and warns that failure to make significant progress could lead first to a negative outlook and then potentially another downgrade.

The political backdrop is hardly reassuring. President Emmanuel Macron's 2024 snap election produced a hung parliament. Since then, budget negotiations have repeatedly become confidence-test moments for weak minority governments; two administrations were toppled in no-confidence votes in December 2024 and September 2025. The 2026 budget finally passed in February only after the government used constitutional powers and survived no-confidence motions.

Prime Minister Sébastien Lecornu has proposed a €54 billion savings effort in the 2027 budget. The government says this is necessary to prevent an otherwise larger deficit and aims for a deficit of roughly 5% of GDP. But passage is uncertain in the divided National Assembly, where the left, center, right, and far right disagree over whether adjustment should focus on spending cuts, tax increases, pension changes, or protection of public services.

"Markets can tolerate high debt longer when governments demonstrate that they can legislate and sustain a credible adjustment," said an official at a major European asset manager, who asked not to be named. "France's political fragmentation has made this assurance harder to provide."

The stakes extend beyond France's borders. As the euro zone's second-largest economy and a core sovereign-bond issuer, an enduring rise in French risk premiums can affect euro-area benchmarks, bank balance sheets, and asset allocation. France is already under the EU's Excessive Deficit Procedure, and the EU Council has called for France to end its excessive deficit by 2029.

Yet the Greece comparison is imperfect. Unlike Greece before its crisis, France retains deep market access and issues debt in the euro, supported by a larger, more diversified economy. Greece eventually lost normal market access and required international rescue programs. France's challenge is credible fiscal consolidation amid political constraints, not a breakdown in official statistics or an acute liquidity crisis.

The meaningful resemblance is that governments can find fiscal correction politically difficult until markets force the issue. "The next budget fight will show whether France can reverse that dynamic before market pressure becomes materially more costly," Bezalel added.

The government did not respond to a request for comment on the Jupiter note. A Finance Ministry spokesperson declined to comment on market speculation but reiterated that the 2027 budget will include "significant savings" to put debt on a downward path.