Business · Markets · 2 hrs ago
French bond spread over Germany reaches highest level since 2012
France's 10-year borrowing costs climbed on Tuesday as investors sold government debt.
The yield reached 4.94%, more than 150 basis points above Germany's, the widest gap since January 2012.
German government bonds are treated as a European benchmark, so the gap reflects investors demanding more to lend to France.
Investors are concerned about France's rising debt and spending and whether the government can control them.
Prime Minister Sébastien Lecornu is seeking parliament's approval for a 2027 budget with 43 billion euros in spending cuts, but he lacks a majority; even if passed, the budget would leave the deficit at 5% of GDP and debt at about 120% of GDP.
Moody's is due to decide on France's credit rating Friday, and a downgrade would raise the government's borrowing costs further.
The yield on France’s 10-year government bond rose to 4.94% on October 20, more than 150 basis points above Germany’s comparable bond.
The gap between the two yields reached its highest level since January 2012.
Investors have sold French debt amid doubts about the government’s ability to control spending and public debt.
Prime Minister Sébastien Lecornu is seeking parliamentary approval for a 2027 budget that includes 43 billion euros in spending cuts.
Markets are also awaiting Moody’s decision on France’s sovereign credit rating, expected Friday.
- Who
- The French government and investors in French government debt.
- What
- The yield on France’s 10-year bond rose to 4.94%, widening its gap with Germany’s bond to more than 150 basis points.
- When
- Tuesday, October 20, 2026. The gap was already widening on Monday.
- Where
- France and Germany’s government bond markets.
- Why
- Investors have doubts about France’s ability to control spending and public debt. Markets are also awaiting a decision on France’s credit rating.
This story does not have two clearly opposing sides.
France’s 10-year yield stood at 4.85% around 9:20 a.m., compared with 3.41% for Germany’s.
France’s 10-year yield reached 4.94%, more than 150 basis points above Germany’s.
Moody’s is expected to decide on France’s sovereign credit rating.
- French 10-year bond yield
- 4.94% on October 20, 2026
- Spread over German bond
- More than 150 basis points
- Previous Monday yields
- France 4.85%; Germany 3.41%
- Proposed spending cuts
- 43 billion euros
- Proposed budget year
- 2027
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What people are saying
The French economic model no longer works