For loans to be repaid over a ten-year maturity, France’s interest rate approached 3.20% around 4:30 p.m.
A sign of investors’ concerns about the French political situation, France’s 10-year borrowing rates continued to rise on the markets on Thursday, four days after the surprise dissolution of the National Assembly. The gap with Germany thus reached its highest since 2017. For loans to be repaid over a ten-year maturity, France’s interest rate approached 3.20% around 4:30 p.m., i.e. 0. 69 percentage points more than the German equivalent.
THE “spread” or difference with the interest rate of a reference country – Germany for Europe – is an indicator that measures investor confidence in a given country. This gap between France and Germany was 0.48 percentage points before the European elections which saw the overwhelming victory of the far-right National Rally (RN) party. In the wake of this electoral result, Emmanuel Macron announced the dissolution of the Assembly and the organization of new early legislative elections, which destabilize the presidential majority and could lead to the arrival of the RN in government.
For Éric Bertrand, deputy general manager of asset manager Ofi Invest, the markets are worried about the “question of the trajectory of public finances”, and they will analyze the programs of the right and the left through this prism. He nevertheless notes that a gap between French rates and German rates “around 0.6 points, there’s not yet panic on board”. The increase in France’s borrowing rates has not reached a level that would present “a lethal risk for the financing of France”he added during a press conference on Thursday. “France is a rich country that knows how to raise taxes”.
