When will the ECB support France?

French government bonds under severe pressure

French government bonds are under severe pressure. While the yield spread between ten-year French government bonds and comparable German Bunds widened only moderately in August, it has recently surged. At 140 basis points, it is now at its highest level since 2012, at the peak of the sovereign debt crisis.

Investors are particularly nervous because the government, lacking political majorities, is not reducing the excessively high budget deficit. However, it would need to be cut by around 5% of GDP over the coming years merely to prevent French government debt from continuing to rise faster than GDP.

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