The political instability around the budget is visible on the financial markets. To realize this, you have to refer to the spread. This economic tool measures the difference in borrowing rates between a country and Germany, which serves as a reference. The gap between France and Germany has rarely been so high. Thus, France’s borrowing rate has been stagnating for months, while at the same time, that of Germany has been falling since June 2024.
Investors assess the financial health of France using this indicator. “Currently, we have the problem of France’s deficit which is exploding and therefore it is not very reassuring for lenders to lend to France”, explains Tarek Elmarhri, founder of Krechendo Trading. The gap with Germany particularly exploded on June 9, an immediate consequence of the dissolution of the National Assembly. Markets are losing confidence as the government struggles to pass a budget.
Watch the full report in the video above.
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