The yield on France’s 10-year OAT rose to 4.93 percent on 20 October, widening the gap with Germany’s 10-year borrowing rate, which stood at 3.42 percent. The French-German spread reached 1.5 percentage points. French yields had already climbed near 5 percent in early October.
Spread widens further
On 19 October the French 10-year yield stood at 4.87 percent, against 4.55 percent for Italy’s equivalent bond. The rise continued into the following week. French rates climbed 9 basis points on the Monday after 17 October, compared with a 2 basis point rise in Germany over the same session. That Monday followed demonstrations on 17 October that drew between 550,000 and 800,000 people, according to police and organiser estimates.
Fitch, which rates France at A+, warned in mid-October that a further increase in debt could cost the country a notch. Moody’s is due to issue its decision on 23 October, with S&P’s review following on 27 November. The European Central Bank has raised rates twice since June.
Budget deadlock deepens
France’s public deficit is expected to reach 5.4 percent of GDP this year, with a government target of 5 percent for 2027. Reaching that goal would require a savings effort of 54 billion euros. Interest payments on the debt are set to rise from 79.2 billion euros this year to 91.2 billion euros in 2027, an increase of 12 billion euros. The Banque de France forecasts growth of 0.4 percent this year.
The revenue part of the 2026 budget was rejected and passed under article 49.3. The 2027 budget was rejected in committee after lawmakers added roughly 9.6 billion euros in revenue losses, and a vote scheduled for 20 October was postponed.
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By comparison, the US 10-year Treasury yield closed at 5.12 percent on 20 October, by MacroHerald’s own market data as of 22 October 2026, 16:24 GMT. US annual inflation stood at 3.7 percent in September, near its 31-day high, a separate reading unrelated to the French budget standoff.
Related: French 10-year yield hits 4.93% as CAC 40 falls 1.11% · France's 10-year OAT yield hits 5% for first time since 2002
Source: European Central Bank | Data: FRED — St. Louis Fed · U.S. Department of the Treasury
