France faces €3.5tn debt burden while needing billions more for climate adaptation

Full text

PARIS — After a summer of extreme, climate change-driven heat, France must spend billions of euros to help the country rebuild and ensure it is better prepared the next time the mercury rises and records fall.

Money, however, is hard to come by.

France is sitting on more than €3.5 trillion in public debt , which is becoming increasingly expensive to finance and is well above the European Union’s limit. Paris has already committed to billions in increased defense spending over the next several years, ruled out significant tax hikes and promised to slash its budget deficit, which came in at 5.1 percent of gross domestic product last year , to 3 percent by 2029 to comply with EU rules.

Crafting a budget for next year that can achieve those goals while also allocating enough resources to prepare France for the next summer of extreme heat that cooks livestock alive, plunges the country into drought and fuels wildfires that drive thousands from their homes is like trying to square the circle. But getting a hung parliament to agree on spending in the run-up to a presidential election will make the exercise even more difficult.

“We need billions — let’s be clear-eyed about this,” said Sophie Panonacle, a centrist, pro-government lawmaker who represents the fire-hit southwestern Bassin d’Arcachon area. “We really must urgently consider this issue of adaptation. We are making no progress at all on this matter.”

Budget crunch, meet climate crisis

Visiting the southwestern town of La Porge on Monday, where hundreds of people saw their homes go up in flames last month, Prime Minister Sébastien Lecornu listed a series of measures crafted to help residents rebuild their homes and keep businesses hit hardest by the fires afloat.

These included a total of €12 million in direct assistance for the two local administrations most affected by the fire, Gironde and the Landes, as well as rebates on property taxes and social security contributions in those areas and more funding to replant forests. Later that evening, President Emmanuel Macron announced that the proposals would also apply to the southern region of Var.

Lecornu said the measures would add up to €100 million, though it’s unclear whether that figure covers costs only in the towns he visited or also in the Var region.

Ecological Transition Minister Monique Barbut said last week that the total immediate cost of the summer’s heat , including lost homes and incomes, could reach €10 to €15 billion — the equivalent of 0.5 percent of GDP — though she cautioned that those figures were a rough estimate. When asked by French daily Libération about Barbut’s estimate, Economy Minister Roland Lescure later said it was too early to quantify the damage.

Whatever the final total comes to, there’s little doubt it will be difficult to pay given the need to get the country’s finances in order.

In a report commissioned by the French finance ministry, top economists last month said France must cut spending and raise taxes by €125 billion by 2032 to prevent its budget deficit from reaching 7 percent of GDP by the end of the decade.

A comprehensive strategy

Critics of the government say it has failed to provide specific details on how it intends to fund immediate and future budget needs for adaptation and climate change mitigation, frustrating lawmakers.

Monique Barbut said last week that the total immediate cost of the summer’s heat , including lost homes and incomes, could reach €10 to €15 billion. | Lou Benoist/AFP via Getty Images

“We need to respond to climate-related events, but first we need a comprehensive strategic review regarding resources already allocated and promises made around fighting wildfires,” said Jean-François Husson, the Senate’s budget watchdog. “We’re addicted to making announcements which aren’t followed by results, and meanwhile the debt levels are spiraling.”

Husson said that he intends to summon government officials to provide clearer figures in the coming days.

“They cannot treat Parliament the way they do, specifically regarding budgetary matters,” Husson said.

That criticism cuts across party lines. Eric Coquerel, the left-wing head of the finance committee in the French National Assembly, has asked the government to urgently present a revised version of this year’s budget to parliament to address the need for more funds.

With state coffers so depleted, Barbut floated in an interview with Libération tapping private savings to help cover costs, as the French rank fairly high among EU countries in terms of savings but, like the rest of Europe, don’t invest much in stocks and bonds .

Panonacle, the centrist lawmaker, is one of 50 MPs pushing a proposal to use €50 billion in private savings to fund costly adaptation policies, including making buildings more resilient to extreme heat, installing more air conditioning in public facilities, and reinforcing flood defenses.

However, that money is already used to finance public projects, particularly social housing, and the economy ministry last year shot down a similar proposal to use money from a popular savings account to bolster defense spending.

Some ministries are focusing on efficiency gains. Interior Minister Laurent Nuñez will present a bill in September meant to modernize France’s civil security providers for example by rethinking its emergency dispatch system so firefighters are no longer deployed for every minor emergency.

“It’s not just about the amounts allocated, but also about how you use resources,” said an interior ministry official, who was granted anonymity to speak candidly.

Once summer ends, the clock starts ticking. Lecornu’s government is expected to present lawmakers with a draft budget to be debated by October. The goal is to get the process done by the end of the year — a goal lawmakers failed to meet in 2024 and 2025.