Paris now pays more to borrow than Rome and Athens.
| Level | ||
|---|---|---|
| France 10-Year | 4.99% | Intraday peak 1 Oct · highest since 2002 |
| Spread vs. Germany | 152 bp | Intraday peak 2 Oct · widest since 2011 |
| Public debt | 119% of GDP | Mid-2026 |
Sources: Euronews, INSEE (peaks of 1–2 Oct 2026)
How did France get here?
France has run big deficits for years and missed its budget targets in 3 of the last 4 years. PM Sébastien Lecornu leads a minority government and must get a €54 billion budget adjustment for 2027 through parliament. A presidential election follows in spring 2027.
- 5.4%: general government deficit, % of GDP, 2026 (EU limit: 3%)
- €79bn → €91bn: central government interest expenditure, 2026 → 2027
| General government interest payable | 2006 | 2010 | 2015 | 2020 | 2025 |
|---|---|---|---|---|---|
| € billion | 48.1 | 50.7 | 44.7 | 29.7 | 66.6 |
Sources: INSEE, La finance pour tous (2027 budget bill, central government interest), BNP Paribas via Euronews (missed targets 2023–26), Eurostat (general government interest D.41, 2006–2025)
Can the ECB step in?
The ECB has a tool to calm bond markets, called the Transmission Protection Instrument (TPI). It can buy a country’s bonds, but only if the country passes four tests.
| Test | Where France stands |
|---|---|
| 1. Follows EU budget rules | France has been under an EU deficit procedure since July 2024. In June 2025, Brussels took no further action. |
| 2. No big economic imbalances | France is not under the EU’s imbalance procedure, although the EU has warned about French imbalances before. |
| 3. Debt under control | The EU sees a high risk for France. Debt keeps rising, to 121.7% of GDP in 2027. |
| 4. Sound economic policy | Depends on France’s 2027 budget. |
Even if France passes all four tests, the ECB is not obliged to act. Its Governing Council decides case by case. It only buys bonds with a remaining maturity of 1 to 10 years. And it stops if the higher yields reflect France’s own budget problems. Lagarde says the fix must come from French budget policy, not the ECB.
Sources: ECB press release on the TPI (21 July 2022), European Commission via Le Club des juristes (June 2025), BSI Economics (EU imbalances review), Euronews, La finance pour tous, Trading Economics (Lagarde, 15 Oct 2026)
Spreading, or only a French problem?
Bond markets across Europe came under pressure too.
- +15 bp: Italian and Greek spreads during the French sell-off
- 6.03%: UK 30-year yield on 1 Oct, highest since 1998
Italy’s spread to Germany widened too, but its 10-year yield (4.49%) is still about 30 bp below France’s (4.79%) as of 15 Oct. Analysts at Macquarie say the jump reflects higher default risk in France.
But: the French spread has eased from its 152 bp peak to about 135 bp (15 Oct), while budget talks continue in parliament.
Sources: Euronews incl. ING (6 Oct), roic.ai (gilts), Trading Economics (France and Italy 10-year yields, 15 Oct), Macquarie via Fortune (2 Oct), ideal-investisseur (OAT-Bund spread, 15 Oct)
What does this mean?
For people in France
Spending freezes and €6bn of savings each on pensions and healthcare. More tax money goes to interest.
For European markets
A weaker euro, pressure on banks that hold French bonds, and higher borrowing costs for Italy and others.
For investors
Bonds now pay more, so they compete with stocks. Long bonds stay volatile until France passes a budget.
Sources: Bloomberg via BigGo Finance (banks, 8 Oct 2026)