French Borrowing Costs Hit 24-Year High
The yield on France's 10-year bonds reached 5%, the highest level in 24 years. Investors are concerned about political deadlock and the budget deficit.
The cost of borrowing for France rose to 5% for the first time in 24 years. The yield on French government bonds with a 10-year maturity rose above 8 basis points in the morning, reaching 5%, before easing slightly to 4.99%. The Guardian reports this, and according to NEWS.am, the rise is linked to political instability and concerns over the state of public finances.
The rise in yields means the government will have to offer investors a higher return to attract funds. Investors are concerned that political deadlock is preventing Paris from reducing the budget deficit and keeping government debt growth in check.
Protests and political crisis
Street protests have continued in France in recent weeks. They began in September with demands to improve conditions in schools, increase funding and address the shortage of teachers. Later, discontent spread to the rising cost of living. In a number of cities, demonstrations were accompanied by clashes with police, rallies and strikes. In Limoges, protesters set fire to the city hall building.
Political instability intensified after the early parliamentary elections of 2024, after which no single party won a majority. Because of differences in parliament, President Emmanuel Macron has not been able to advance a number of initiatives, including raising the retirement age from 62 to 64 and measures to cut government spending.
Budget and debt
At the end of 2025, France's budget deficit stood at 5.1% of GDP, while government debt reached 115.6% of GDP. Without additional measures, both indicators may continue to rise.
Against the backdrop of financial risks, some foreign investors, in particular Japanese fund managers, have reduced their lending to France, while others demand higher returns.
Mattie Ryan, head of market strategy at the payments platform Ebury, noted that political risks in France are also putting pressure on the euro. According to him, it remains unclear whether the government will be able to pass the 2027 budget through parliament, and possible concessions to the left and right may prove insufficient to resolve the deficit problem.
Source: news.am
