Overview
- French 10‑year bond yields rose close to 5% on Friday as the gap over German Bunds widened to about 150 basis points, the largest premium since the euro‑zone debt crisis.
- Five‑year credit‑default swaps for France jumped into the 80–87 basis point range, meaning investors now pay substantially more to insure against French sovereign default risk.
- The government proposed €54 billion in savings for the 2027 budget but markets remain skeptical because France’s debt is forecast to climb to roughly 122% of GDP next year.
- Deep political polarization ahead of the 2027 presidential contest, with far‑left and far‑right fiscal plans that could raise costs or cut revenue, has undermined confidence in France’s ability to deliver credible consolidation.
- Widening French spreads have already pushed up borrowing costs for other euro‑area issuers and could force ECB intervention if stress spreads to banks, corporate funding or wider sovereign markets.