French Bond Yields Climb While Public Protests Demand Higher Government Spending
France faces mounting economic pressure as the yield on ten-year French government bonds climbed above 5 percent—reaching its highest level since 2002—while protesters take to the streets each weekend demanding increased public spending on education and other services. This yield surge leaves France paying more to borrow money than Italy and Spain. The country carries a national debt of 3,6 biljoen euro, alongside a projected budget deficit that exceeds 5 percent of its gross domestic product. Economic growth remains close to zero, with inflation at 3.4 percent and unemployment at 8.2 percent.
The widening gap between state expenditures and revenues stems partly from rising defense costs and a relatively low retirement age, though massive corporate subsidies receive little attention in standard budget debates. Research by French investigative journalists reveals that tax breaks, direct state aid, and exemptions from social security contributions for businesses cost the government 270 miljard euro annually. According to investigative journalist Caroline Michel-Aguirre, author of The Great Diversion
, this corporate support drives the national debt explosion, which grew from under 100 percent of GDP when Emmanuel Macron took office in 2017 to 120 percent.
Moody’s Maintains Credit Rating While Parliament Debates the 2027 Budget
Despite deteriorating public finances, credit rating agency Moody’s maintained France’s creditworthiness at Aa3 while keeping the outlook negative, preventing an immediate downgrade to A1. The upcoming budget for 2027 presents a critical test for the government, as Moody’s expects lawmakers to pass measures that reduce the deficit. Parliament remains deeply divided, however, amid ongoing protests over the rising cost of living.
European policymakers watch the situation closely because France holds the eurozone’s second-largest economy, accounting for nearly a fifth of the monetary union’s economic output in 2025. The French public debt represents roughly a quarter of the total debt accumulated across the 21 nations of the eurozone. Harald Benink, a professor specializing in European Union economics, warns that if bond yields climb further, the government will need to implement sharper spending cuts simply to cover higher interest payments. Morgan Stanley economist Jean-François Ouvrard points out that French state loans still find buyers in the market despite these higher borrowing costs, though Ouvrard acknowledges that this investor interest does not mean concerns have vanished.
I keep being asked. How long can France go on with budget deficits and increasing debt until we get a crisis? The answer: I cannot tell. Not because I am particularly dumb (this is a separate issue). But because there is a potentially large danger zone, where the crisis may or…
Government Control Fails Amid Protests and Police Deployment
European correspondent Stefan de Vries stated that the French government has lost control of the situation and is resorting to antidemocratic measures. Lecornu stands with his back to the wall as unions reject negotiations, and CGT union leader Sophie Binet announced that no concrete proposals had been offered to justify canceling strikes. Authorities have deployed the military to guard buildings so police officers can focus on crowd control during demonstrations. De Vries characterized curfews, protest bans, and discussions about deploying emergency powers or restricting social media as signs of an administration losing its grip.
Meanwhile, Marine Le Pen watches the political instability grow, positioning her party to capitalize on widespread public dissatisfaction with the status quo, while many citizens hope she can get the country back on track despite lacking convincing answers to structural problems. Activists point out the hypocrisy of funding corporate giants like TotalEnergies—which posted profits exceeding 11 miljard euro in het eerste half jaar—while the government claims it lacks 10 miljard euro beschikbaar voor investeringen in onderwijs. As financial markets demand higher risk premiums, the administration must manage simultaneous parliamentary gridlock, widespread labor unrest, and the threat of future credit downgrades.