2025.08.2909:47:26UTC+00France 10-Year Bond Yield Nears Five-Month High

France's 10-year bond yield increased to approximately 3.51%, returning to the high levels witnessed in March. This rise highlights growing investor concerns regarding the country's persistent political instability. Prime Minister François Bayrou is positioning for a confidence vote on €43.8 billion in budget cuts scheduled for early September. Should opposition parties follow through on threats to oppose, it may result in another governmental collapse. Such a scenario could lead to new legislative elections and postpone deficit-reduction strategies. Last year, France's budget deficit reached 5.8% of GDP, nearly double the European Union's official limit of 3%. Economically, the French economy expanded by 0.3% quarter-on-quarter in the second quarter of 2025, aligning with preliminary projections and improving from 0.1% growth in the first quarter, marking the most robust growth in three quarters. Concurrently, initial figures indicated that France's annual inflation rate decreased to 0.9% in August, falling short of market predictions which had anticipated it would remain stable at July’s rate of 1%.