Banque de France Chief Warns France Risks 5% Bond Squeeze Without €43 Billion Budget Fix
Updated
Updated · Financial Times · Oct 5
Banque de France Chief Warns France Risks 5% Bond Squeeze Without €43 Billion Budget Fix
3 articles · Updated · Financial Times · Oct 5
Summary
Emmanuel Moulin said France could be “gradually strangled” by rising interest rates unless it passes a budget this year to cut spending and narrow its deficit, arguing investor confidence can still be restored.
€43 billion in spending cuts and tax rises proposed last week are meant to tackle a deficit forecast at 5.4% of GDP, but the minority government faces a bruising parliamentary fight over pensions and civil-service pay.
French 10-year yields, which have risen more than any other G7 bond market since the Iran war began, neared 5% on Friday before easing to 4.86% on Monday; the spread over Germany briefly topped 1.5 percentage points.
Moulin rejected talk of immediate ECB support, saying France’s “safety net” is domestic fiscal repair even as higher energy prices, tighter financial conditions and recent ECB rate hikes keep pressure on borrowing costs.