Why France is selling its “family jewels” abroad to cover expenses

While debates in France often focus on public debt, another financial imbalance is quietly worsening: the country’s persistent external deficits. Year after year, these gaps have deepened to the point where France has little choice but to part with some of its most strategic assets—a practice critics liken to selling off the nation’s “family jewels.”

A hidden deficit that matters

As of March, France’s public debt stood at over €3.1 trillion, a figure that dominates headlines. Yet the balance of payments deficit—essentially the difference between what France buys and sells abroad—rarely makes the news. According to the Banque de France, this shortfall reached €19.4 billion over the past twelve months.

At its core, the problem lies in trade. Goods alone posted a deficit of €60.3 billion, even as services like tourism helped soften the blow with healthy surpluses. François Villeroy de Galhau, Governor of the Banque de France, summed it up: “France is a cicada—we consume more than we produce, and it weakens both our growth and our net external position.”

Falling behind Europe

Unlike its neighbours, France consistently struggles with external imbalances. Germany, Italy, and Spain all run surpluses, as do smaller eurozone members such as Ireland and the Netherlands. After two decades of deficits, France’s net international investment position is now negative €793 billion—around 28% of GDP. In plain terms, foreign investors own far more in France than French investors own abroad.

This figure rarely surfaces in public debate, overshadowed by Maastricht’s well-known 3% deficit and 60% debt thresholds. Yet Brussels also monitors external debt, with a warning threshold set at 35% of GDP. France is uncomfortably close.

The euro’s “protective shield”

Before the euro, such deficits often triggered crises: the franc was devalued four times in the 1980s alone. Today, the single currency prevents that kind of immediate backlash, creating a sense of impunity. Unlike public debt, external debt doesn’t directly drive up borrowing costs.

Still, foreign ownership matters. By late 2023, over 54% of French government bonds—about €1.7 trillion worth—were held by overseas investors. Meanwhile, French companies invest far more abroad (€1.48 trillion) than foreign firms invest in France (€919 billion).

Selling strategic assets

To plug the gap, France has quietly allowed foreign investors to buy into sensitive industries. In 2023 alone, the Ministry of Finance approved the takeover of 135 companies in defence, transport, healthcare and space.

The reality is stark: to fund everyday consumption—from cars to smartphones—France has had to part with key national assets. The balance of payments deficit, far from abstract, directly translates into a loss of sovereignty.

Producing more, consuming smarter

Despite political rhetoric about France being “Europe’s most attractive destination” for investors, the numbers tell another story: French firms see better opportunities abroad than foreigners see in France.

The lesson, say economists, is clear. To safeguard both purchasing power and sovereignty, France must boost productivity and competitiveness. Without that, the country risks financing its lifestyle by selling off more of its family jewels—piece by piece.