France’s public debt has risen to about 120% of GDP, and the government lacks a clear strategy to curb its expansion, European Central Bank President Christine Lagarde said in an interview with La Croix. She warned that the absence of a fiscal plan at such a scale poses a serious problem for the euro area’s second‑largest economy and requires urgent action from authorities.

According to Lagarde, budgetary strains are being compounded by political uncertainty, which is denting the investment climate and worrying businesses. Slowing economic growth adds to the strain: France’s GDP is forecast to expand only about 0.5% this year versus an EU average near 0.9%. That slows tax receipts and makes it harder to service legacy debt.

Her comments come amid contentious debates over the budget and efforts to cut the deficit without undermining social programs. High interest rates are lifting the cost of debt servicing, adding further pressure to public finances. Analysts warn that without meaningful spending restraint, France risks losing creditor confidence and triggering a new episode of financial instability.