France Is Not Facing A Debt Crisis Despite Soaring Bond Yields, Analysts Say

Analysts urge calm over France’s surging borrowing costs, though they caution that risks still persist.

France’s Borrowing Costs Jump To Multi Year Highs

French bond yields have climbed sharply in recent weeks. The gap between French and German 10 year bonds has widened to levels last seen during the eurozone debt crisis. Even so, analysts say this does not signal a fresh debt crisis for France. They do warn that uncertainty lies ahead.

“This Is Not A Debt Crisis,” Says BNP Paribas Economist

Stephane Colliac, senior economist at BNP Paribas, dismissed talk of a crisis. He stated plainly, “The short answer is no, this is not a debt crisis.”

Colliac explained that France’s effective interest rate stays lower than the market’s rising yields. It sits just above 2 per cent, close to the Netherlands’ rate. He added that France has faced the same inflationary pressure as most advanced economies. This stems from conflicts in the Middle East and higher global bond yields.

Political Gridlock Blocks Deficit Cuts

French politicians have long worried about ballooning debt and a wide budget deficit. Trimming that deficit has proved difficult, though. No political party holds a majority in the National Assembly. Since late 2024, budget disputes have brought down two French governments.