Key facts
- French 10-year bond yields exceeded 5% for the first time in 24 years.
- The French government has not yet passed its budget for the upcoming year.
- France's budget deficit was 5.1% of GDP in 2025, with debt at 115.6% of GDP.
- Some international lenders, including Japanese fund managers, have reduced lending to France.
- The euro has weakened against other major currencies due to political risk in France.
France's borrowing costs have climbed above 5% for the first time in 24 years, driven by political instability and concerns over the government's budget. The yield on the benchmark 10-year bond rose significantly in morning trading amid ongoing civil unrest and fears of increasing deficits. Stores have been looted and public buildings damaged during recent protests, which began over school conditions but broadened to encompass the rising cost of living. Parliamentary gridlock has hampered the government's ability to pass its budget and implement spending cuts. The country's budget deficit and debt levels are forecast to increase without intervention, leading some international lenders to demand higher rates or withdraw entirely. The political risk premium in France is also weighing on the euro's value against other major currencies.