How much debt is France in?
Quite a lot - latest figures show that France's national debt has risen to €3.6 trillion.
The deficit is projected to reach a record high of 121.7 percent of GDP in 2027 under the government's budget proposal, up from 119 percent.
Meanwhile, the country is paying roughly €90 billion a year just in interest payments on its debt - that's more than the total education budget.
Is this a new problem?
No. France has, famously, not balanced a budget since 1974 (even though there are supposed to be EU rules on that).
Like many countries around the world, French debt became worse during the Covid pandemic due to the measures the state had to take to protect the population, for example, the chômage partiel (furlough) payments for people who could no longer work because their workplace was closed due to lockdown.
The country also spent big in 2024 protecting people from cost increases like electricity price hikes linked to Russia's full-scale invasion of Ukraine, and is also offering financial aid to motorists hit by fuel price rises following the US and Israeli attacks on Iran.
So why is it suddenly a crisis now?
It's partially due to the increase in the deficit over the past decade, but also due to the political instability that appears to be making investors nervous.
Since the snap parliamentary elections in 2024, the French parliament has been deadlocked, which has made passing a budget extremely difficult - two prime ministers (Michel Barnier and François Bayrou, remember them?) were toppled due to budget arguments. France has for the past three years essentially been operating under rollover budgets or emergency budget measures, which have made it impossible for the country to do anything about tackling its debt.
Because we're in autumn now, budget debates are beginning again and look likely to be equally fraught - there's a strong possibility that prime minister Sébastien Lecornu will be toppled, as well as France having to once again resort to an emergency budget heading into 2027.
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It's less the size of the debt that's making investors nervous, more the fact that France appears incapable of doing anything to tackle it.
The draft 2027 budget contains modest proposals to reduce the annual shortfall between income and expenditure from 5.4 percent of GDP to 5 percent, and it is unlikely to pass.
Meanwhile, protesters on the streets are calling for more money for schools (as French lycée students protest over a lack of teachers and crumbling classrooms) and for financial aid for motorists and people struggling with the cost of living.
Ratings agencies are threatening to cut the country's credit rating - meaning that interest payments on the debt would get even more expensive. Meanwhile, turmoil on the financial markets attracts the kind of unsavoury characters who make money off other people's/countries' misfortune and in turn force interest payments even higher.
And with interest rates now rising worldwide due to energy-driven inflation, "the countries whose public finances are the most deteriorated - as is the case in France - are punished the most", said Lilia Peytavin, an analyst at JP Morgan Asset Management in Paris.
"The markets knew the state of public finances but they trusted a stable political system, which is now no longer the case," said Andrzej Szczepaniak, chief economist at Nomura in London.
Do we need to be worried about this?
The IMF appears to have concerns. International Monetary Fund managing director Kristalina Georgieva on Tuesday said: "France is currently aiming to get a budget that would put deficit and debt on a downward trajectory.
However, she said, "it would take time before it could come down to levels that are providing confidence - full confidence - to people and to the investor community".
Within France, the economy minister Roland Lescure says: "We have the confidence of the markets in the sense that we have no trouble issuing debt," - but he acknowledged that: "It costs us more, and that is an alarm signal we all need to take on board."
France's 10-year government bond yield has already neared five percent on the markets in recent weeks.
Speaking in Bangkok, Bank of France Governor Emmanuel Moulin called on French political leaders to "shoulder their responsibilities" to ensure the adoption of a budget, in apparent reference to a constitutional provision that allows governments to force through legislation without a vote.
But the French economy is not only a problem for France - as the second largest economy in the eurozone, a major debt crisis risks affecting the wider eurozone.
EU economy commissioner Valdis Dombrovskis told AFP on the sidelines of the IMF-World Bank annual meetings in Bangkok on Tuesday that "it's important to have clarity about the budget" in France.
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