France Not Facing Debt Crisis Despite Rising Yields and Political Deadlock: Analysts
Analysts believe France is not heading for a debt crisis despite rising government bond yields and political deadlock. They warn, however, that risks remain.
Abdulrahman Sadikhli1 min read
Analysts are urging calm amid a sharp rise in French borrowing costs. In their assessment, despite the spread of the country's 10-year bond yields over German yields reaching levels not seen since the eurozone crisis, France is not facing a prolonged debt crisis. At the same time, experts point to persistent risks and uncertainty about the future.
"The short answer is no, this is not a debt crisis," said Stefan Kolliak, senior economist at BNP Paribas.
According to Kolliak, France's effective interest rate is below the rising market yield, at just above 2%, roughly the same level as the Netherlands. He added that France has faced the same inflation as most developed economies due to Middle East conflicts and rising yields.
Political Deadlock and the Budget
French politicians are concerned about rising debt and the budget deficit, but reducing the deficit has proved a difficult task in the National Assembly, where no political group holds a majority. Since late 2024, discussions over the national budget have brought down two governments.
Source: scmp.com
