French government 10-year bond yield tops 5% for first time since 2002

Published on 21/10/2026 - 11:49 GMT+2

French yields have been rising for weeks as lawmakers wrangle over a 2027 budget that calls for billions of euros in spending cuts to reduce a debt pile that now stands at around 120% of France's GDP - one of the highest levels in the eurozone and well above the EU limit of 60%.

The French Treasury's OAT bond is also used to set interest rates across a wide swath of the economy, meaning borrowing costs could begin rising for businesses and households.

The last time it was that high was during the dot-com financial crisis.

The spread between the 10-year yield and the German 10-year bond, considered the European benchmark of creditworthiness, also surged to nearly 160 basis points.

The bond selloff puts further pressure on the government ahead of a decision Friday by the ratings agency Moody's on France's sovereign credit rating, with most economists expecting a downgrade that would automatically raise the government's borrowing costs.

Prime Minister Sebastien Lecornu is trying to get a 2027 budget approved in parliament despite not having a political majority for the €43 billion ($48bn) in spending cuts he seeks.

Even if approved, the budget would bring France's deficit down to only 5% of GDP next year, well above the 3% limit for EU members.

Meanwhile, protests over the weekend calling in part for more spending on schools and other public services, degenerated into the worst street violence seen in years.