France borrows at higher yields than Italy, with its widest spread over Germany since 2012: is it the new Italy?

Executive summary

• The spread between French ten-year government bond yields and German bond yields of the same maturity closed at 140 basis points on 1 and 2 October 2026, the widest closing spread since 21 May 2012. A basis point (Basis Point) is one hundredth of a percentage point. This spread means France pays 1.40 percentage points more than Germany on its ten-year debt. The spread widened after the government presented its draft 2027 budget on 1 October, projecting a deficit of 5.4% of GDP in 2026 and targeting 5.0% in 2027.
• The level has not reached those seen in 2011. The French spread’s highest close during the eurozone debt crisis was 190 basis points on 15 November 2011, while the Italian spread’s highest close was 556 basis points six days earlier. France today is closer to its own peak than to Italy’s.
• But the ranking has changed. Since 6 October 2025, the French ten-year yield has closed above Italy’s in 142 sessions, and in every session since 24 August 2026. The French yield had never exceeded Italy’s at any earlier close in the series we used, which begins in 2009. On 5 October, the spread between the two countries reached 23 basis points in Italy’s favour, even though Italy’s debt is higher: 137.1% of GDP versus 115.6% for France at the end of 2025.
• The explanation lies in the annual deficit, not the debt stock. Italy recorded a primary surplus of about 0.8% of GDP in 2025, meaning its revenues exceeded spending before interest payments, while France recorded a primary deficit of about 2.9%, the worst among the eurozone’s four largest economies, according to EL7 calculations using Eurostat data.
• The move began in France, but spread beyond it. Since 31 August, the French yield has risen 69 basis points versus 17 for the German yield, widening the spread by 52 basis points. Over the same period, the Italian spread widened by 30 basis points and the Spanish spread by 20.
• The safety net exists, with conditions. The Transmission Protection Instrument (Transmission Protection Instrument (TPI)), a bond-buying tool to protect monetary policy transmission across euro area countries, held by the European Central Bank (European Central Bank (ECB)), is activated only against “unwarranted” moves and requires the country to comply with European fiscal rules. France has met the first condition since the European Commission (European Commission) assessed on 3 June 2026 that it had taken effective action to correct its deficit. The next tests have set dates: Moody's review on 23 October, the European Central Bank meeting on 29 October, and the S&P Global review on 27 November.

Five criteria comparing France today with the 2011 crisis

France on 5 October 2026 compared with the euro area debt crisis, criterion by criterion