France Faces Fiscal Crisis as Bond Yields Hit 2008 Highs

France is experiencing a severe fiscal crisis as the yield on its 10-year government bonds rose above 4.5% for the first time since 2008. This surge reflects growing investor concern over political instability and a national debt projected to reach 121.7% of GDP by 2027.

Prime Minister Sébastien Lecornu intends to submit a 2027 budget proposal in early October that targets 54 billion euros in spending cuts. The measures aim to reduce a budget deficit expected to reach 5.4% this year. The spread between French and German borrowing costs has now exceeded one percentage point.

Lecornu faces a divided National Assembly that has ousted previous administrations via no-confidence votes in December 2024 and September 2025. To meet the mid-December deadline, the Prime Minister may be forced to use constitutional powers to bypass parliament. This financial volatility occurs as the country prepares for a presidential election next spring.