France Fiscal Crisis Deepens as Bond Spreads Blow Out to 140bps

Key Facts

1The French government unveiled plans for €43bn in spending cuts and higher taxes to tackle the fiscal deficit.

2The spread between 10-year French OATs and German Bunds blew out to more than 140bps.

3French debt interest costs are expected to rise 15% next year to reach €91bn.

The French government unveiled plans for €43bn in spending cuts and higher taxes to tackle its widening fiscal deficit. Reuters reported that the spread between 10-year French OATs and German Bunds blew out to more than 140bps, signaling intensified pressure on sovereign borrowing costs. The government expects debt interest costs to rise by 15% next year, reaching a total of €91bn.

Investor skepticism remains high regarding the government's ability to pass these reforms through a fractured parliament, as the deficit is only projected to fall from 5.4% to 5% despite the austerity measures. In broader regional context, data from September 29, 2026, showed Spanish business confidence at -1.6, while French unemployment benefit claims fell by 61.3k on the same date.