©Kenzo Tribouillard/AFP
On Wednesday, France's ten-year borrowing rate briefly exceeded that of Greece on the financial markets, a historic first that resonated like a snub. For a few hours, in the eyes of investors, it was as risky to lend to Paris as to Athens.
This shift illustrates a worrying reality: while Greece is picking itself up after a decade of international supervision, France seems to be getting bogged down in fragile public finances.
“These are two divergent trajectories for public finances: Greece is bouncing back after going bankrupt and being placed under the supervision of the International Monetary Fund (IMF),” rationalizes Aurélien Buffault, bond manager at Delubac AM. According to him, France still has room to maneuver. That being said, the accumulation of debts, aggravated by the health crisis and difficult to catch up on afterwards, has every reason to be concerned.
Beyond the symbolic, the signals are multiplying. The gap between French and German rates has reached its highest level since 2012, recalling the dark hours of the European debt crisis. As reported by AFP, S&P Global Ratings is preparing to reassess France, following severe warnings from Moody’s and Fitch. Despite these warnings, the country can still count on a debt deemed “liquid”, which reassures investors in the short term.
With all this, the executive’s inability to convince on its budget project for 2025 weighs heavily. If the country remains structurally rich, it is no longer enough to reassure on paper. A fundamental reform seems inevitable, otherwise France could lose more than its reputation on the markets.
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