France’s Borrowing Cost Tops 5% as Europe’s Riots Spread to Italy
French ten-year borrowing costs briefly rose above 5% this morning for the first time since July 2002, before easing back just below. The premium over Germany is near 160 basis points, and France now pays more to borrow than Italy. Italy has sent 500 soldiers to Milan after two nights of disorder.
France’s debt is around €3.6 trillion, or 119% of national income, up from 98% in 2019 and the highest since shortly after the Second World War. The prime minister is seeking €54bn of savings, and his finance minister, Roland Lescure, was asked how he would force a budget through a hostile parliament: “I’m convinced of this because we have no choice. We have the tools to get it passed.” Nearly 2,400 people were arrested in France at the weekend. In Milan, where 271 young people were detained, Giorgia Meloni said “destroying and stealing is not protest, it is crime, and the state’s response must be firm”; her government plans penalties of up to five years and €20,000, and powers to detain 14- to 17-year-olds on evidence of danger before any crime is committed. President Macron, in Doha, attacked commentary he called “unacceptable and stupid from many quarters, including from foreign leaders” who were “campaigning at our expense”. The read-across for Britain is uncomfortable rather than identical: the ten-year gilt is steady today but sits at about 5.4%, close to its own highs, a week before the Budget.