The yield on France's 10-year OAT rose to 3.04%, while the risk premium over German Bunds widened to 90 basis points, the highest level since 2012, amid rising political uncertainty in France.
France 10-year yield rises
The 2025 budget remains far from approval, with Marine Le Pen’s far-right party threatening to destabilize the government unless her demands—such as blocking electricity tax increases and raising state pensions—are met. The budget bill for next year must be approved by December 21st, and Michel Barnier's minority government is under pressure to reduce France's debt and manage public finances.
Plans to cut deficit
The government plans to cut the deficit from an estimated 6% of GDP this year to 5% in 2024 through a €60 billion austerity program. Meanwhile, ongoing economic challenges in Europe and growing concerns about the potential impact of a second Donald Trump administration continue to weigh on investor sentiment.
