What rising rates change about the cost of French debt

The ten-year interest rate on French government borrowing — the benchmark for obligations assimilables du Trésor (OAT), as the European Central Bank (ECB) publishes it as an annual average — was −0.15% in 2020. It is 3.37% in 2025. In between, the State kept borrowing every year, and its debt stock reached €3,460.1bn.

The question is not “have rates risen?” — they have, by 3.52 points of percentage in five years. It is: when and how does this rise reach the interest the State actually pays, and under what condition does it become a problem for the debt path?

Over forty years, the ten-year rate traces a long descent and then a rebound. It peaks at 9.92% in 1990, falls below five per cent in the late 1990s, below one per cent from 2015, and touches its low at −0.15% in 2020 — a year when lending to the French State returned less than nothing. The 1986-1995 average is 8.49%; the 2015-2021 average, 0.41%.

The rebound takes three years: 0.01% in 2021, 1.70% in 2022, 2.99% in 2023, then a plateau — 2.97% in 2024, 3.37% in 2025. The 2025 level remains below that of 2009 (3.65%), before the euro-area crisis.

What has changed is not just the level of the rate, it is its position relative to growth. A debt weighs less when the economy grows, in value, faster than the rate at which it is borrowed. In 2019 the ten-year rate was 0.13% for nominal gross domestic product (GDP) growth of 3.3%: the gap, −3.1 points of percentage, worked in favour of the debt. In 2023, inflation lifts nominal growth to 6.8% for a rate of 2.99%: the gap stays favourable, −3.8 points.

In 2025, nominal growth falls back to 1.9% — activity grows by 0.8% in volume and consumer prices by 0.9% — while the rate holds at 3.37%. The gap becomes +1.5 points: leaving aside 2020, when GDP collapsed, it is the first time since 2014 that the State borrows at a higher rate than the economy that repays it grows.

The ten-year rate is an issuance rate: the one at which the State borrows today. The rate it pays on its whole debt is an apparent rate, the average of the rates of all borrowings still alive, many of which date from the zero-rate years. Each year, only a fraction of the stock matures and is refinanced at the current rate: the rise therefore passes through in layers, over several years, and it has not finished passing through.

An order of magnitude, calculated by France ÉcoScan and to be read as such: debt rose from €2,387.4bn to €3,460.1bn between 2019 and 2025; if that increase were entirely borrowed at the 2025 rate, it would cost about €36.1bn of interest per year. That is not the actual interest bill — which depends on the maturity of each security and on the inflation-indexation of some of them — but it is the scale of the subject.

Over the 2015-2024 decade, the ten-year rate was below nominal growth in 9 years out of ten. It is that gap, more than the level of rates, that allowed the debt ratio to stabilise between 2015 and 2019 despite persistent deficits.

Three breaks can be read on the curve. Entry into the euro (1999) anchors the French rate to the German rate and extends the decline that began with the disinflation of the 1990s. The euro-area crisis (2011-2012) briefly interrupts that decline without reversing it. The ECB's purchase programme and negative-rate policy (2015-2021) bring the rate to zero, then below.

The 2022 turnaround accompanies the return of inflation — 5.2% in 2022, 4.9% in 2023 — and the ECB's policy-rate increases. The 2024-2025 plateau, around three per cent, coincides with questions about France's fiscal path; the page on the spread with Germany deals with them.

In 2025, the State borrowed at ten years at 3.37% on an annual average, the economy grew by 1.9% in value, and debt weighed 115.7% of GDP at year-end; GDP is provisional, the rate final. Since then the rate has kept rising — 4.00% as a monthly average in August 2026, according to the ECB — and debt reaches 119.0% of GDP at the end of the second quarter of 2026, according to the Institut national de la statistique et des études économiques (INSEE), provisional figure.