A key measure of France’s sovereign borrowing costs hit a 12-year high on Tuesday, November 26, indicating growing investor concern over the government’s stability following snap elections earlier this year. The “spread” which measures the gap between yields on French 10-year state bonds and the benchmark German ones hit 0.86 percentage points, up from 0.72 on November 18.
Investors were demanding a yield of 3.05 percent to buy French sovereign debt because of the higher risk, compared to only 2.18 percent for German government-issued bonds.
The peak came with the government facing the threat of a no-confidence vote next month over its proposed 2025 budget, with 60 billion euros ($63 billion) in planned spending cuts and tax rises.
It faces tough resistance from rival parties after a snap election in June left President Emmanuel Macron without a workable majority in parliament.
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France key bond spread hits 12-year high
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