From CNBC · Chloe Taylor · · 1m 50s
French bond yields hit 22-year high as unrest deepens
France's 10-year borrowing costs spike above 5% for the first time since 2002 as violent protests clash with government austerity plans.
In brief
France's 10-year borrowing costs spike above 5% for the first time since 2002 as violent protests clash with government austerity plans. France's 10-year bond yield crossed 5% for the first time since 2002 as violent protests over spending cuts and cost of living collide with government efforts to slash the deficit…
French borrowing costs hit 24-year peak
The yield on France's benchmark 10-year government bond crossed 5% for the first time since 2002 on Wednesday, briefly surpassing that threshold before settling around 4.98%.
Violent protests demand spending on services
Mass civil unrest has resulted in violent protests and rioting over the weekend, with broad public dissatisfaction over the high cost of living and demands that government invest in education.
Government targets 54 billion euros in cuts
Prime Minister Sebastien Lecornu is negotiating the 2027 fiscal budget and targeting fifty four billion euros in spending cuts to address France's ballooning deficit and national debt.
EU demands deficit below 3 percent
France is subject to the EU's excessive deficit procedure, with the bloc recommending Paris bring its national deficit closer to 3% of GDP, compared with 5.1% at the end of last year.
Lescure threatens to bypass parliament
Finance minister Roland Lescure told RTL on Wednesday the government will force the budget through if lawmakers do not agree, using Article 49.3 of the French constitution to bypass a parliamentary vote.
“If we veer off course, we'll activate the guardrails.”
History of budget standoffs
Lecornu himself resigned less than a month into his tenure over budget divisions, only to be reappointed by President Emmanuel Macron days later. Previous administrations were ousted when spending disagreements came to a head.
Le Pen's election could add uncertainty
Bond traders are watching next spring's French presidential election as a potential source of instability.
The short version
France's 10-year bond yield crossed 5% for the first time since 2002 as violent protests over spending cuts and cost of living collide with government efforts to slash the deficit.
