French Borrowing Costs Cross 5% for First Time Since 2002
The yield on France’s ten-year government bond briefly rose above 5% on Wednesday morning, the first time since 2002, before settling near 4.98%. Investors doubt a fractured parliament can pass the 2027 budget after weekend riots; the finance minister, Roland Lescure, said the government was willing to bypass parliament again if necessary.
Prime Minister Sébastien Lecornu is targeting €54 billion of spending cuts. France remains under the EU’s excessive deficit procedure, with a deficit of 5.1% of GDP at the end of last year against a 3% reference. This year’s budget was forced through without a vote in February using emergency powers; repeating the manoeuvre would deepen the street anger already visible. For Britain, the read-across is uncomfortable: gilt yields remain above 5.3%, and the Budget is a week away.