France’s debt drama sends bond yields to 5%
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France's 10-year government bond yield touched the 5% mark on Wednesday, as it scaled a new 24-year high, the country tries to control the fiscal strain.
French borrowing costs have surged to their highest in more than two decades, pushing the gap over German debt to levels last seen in the euro crisis.
Fiscal strain is the main driver. Bloomberg reported the deficit at 5.4% of GDP this year, against the EU's 3% limit, with a plan to cut it to 5% in 2027. CNBC reported debt is expected to reach a record 119.3% of GDP in 2026. Bloomberg said France plans to record a borrowing of €340B next year.
Politics added more pressure. The government has been trying to pass an unpopular 2027 budget in a deeply divided parliament. France is also witnessing student protests, which have added to the strain.
Government bond yields have surged all over the world in 2026, amid a rise in energy costs. Central banks of some countries responded to the rising expenses by hiking interest rates.
The French 10-year OAT rose 5.002% at the time of writing.
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