Europe’s bond vigilantes just put France back on the euro-crisis mood board. French government borrowing costs spiked as Paris unveiled a cost-cutting 2027 budget — and strategists said the daily moves looked “reminiscent of the Euro crisis,” Euronews and The Guardian reported Friday.
France’s 10-year yield hit 4.96% on Thursday — its highest since July 2002 — before easing to about 4.92% Friday morning. The France–Germany spread blew out past 140 basis points, the widest gap since 2012, with Thursday’s jump the biggest daily rise since March 2020, Deutsche Bank’s Jim Reid told clients.
Paris is seeking about €43 billion in new savings to cut the deficit from 5.4% of GDP this year to 5% next year. Public debt sits at a post-war record 119% of GDP, and France plans to borrow a record €340 billion next year. Finance Minister Roland Lescure insisted France’s signature is “solid”; the High Council of Public Finances called the 1% growth forecast optimistic and a return under the EU’s 3% deficit cap by 2029 “very unlikely.”
Eurozone inflation jumped to 3.8% in September — a three-year high — adding fuel to the rate-hike fear that lit the sell-off. Markets steadied Friday as oil slipped, but the message from the OATs pit was blunt: credibility is the collateral.
Sources: Euronews; The Guardian; France 24 / AFP
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