French borrowing costs hit 24-year high as civil unrest and budget fears spook markets
Summary
France’s borrowing costs have risen above 5% for the first time in 24 years due to political unrest and the government’s delay in approving the budget. Protests and a divided parliament have made international lenders hesitant to loan money to France, pushing up interest rates on French government bonds.Key Facts
- The interest rate on France’s 10-year government bond hit 5%, the highest in 24 years.
- France is facing civil unrest with violent protests over issues like school conditions and the rising cost of living.
- Stores, including luxury brands, have suffered looting, and some public buildings have been set on fire during protests.
- No political party has majority control in France’s parliament since President Macron’s 2024 snap election.
- Parliament’s deadlock is blocking pension reforms and budget measures meant to control spending.
- France’s budget deficit was 5.1% of its GDP in 2025, with government debt at 115.6% of GDP.
- Some international lenders, including Japanese fund managers, have stopped lending to France.
- Remaining lenders want higher interest rates, especially for long-term loans, due to doubts about France’s fiscal plans.
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