French Borrowing Costs Reach 24-Year High Amid Political Unrest

France is facing a difficult economic moment as the cost for the government to borrow money has risen to its highest level in 24 years. According to The Guardian Business, the interest rate on 10-year French government bonds—which are official promises to pay back money borrowed from investors—has climbed above 5%. This increase has worried financial markets, which are already nervous about the country's political future.

The current financial trouble is linked to a combination of street protests and a government that has not yet agreed on a budget for the coming year. The protests began in September when students gathered to demand better conditions in schools, complaining about large class sizes and poor building maintenance. Over time, these demonstrations grew into larger protests about the rising cost of living. While the protests were initially calm, they have become more violent in recent weeks. The Guardian Business reports that some towns have seen riots, with protesters setting fire to buildings and looting shops.

At the heart of this issue is a lack of political unity. Since President Emmanuel Macron called for an early election in 2024, no single political party has held full control of the parliament. This situation, often called a political gridlock, makes it very difficult to pass new laws. As a result, the government has been unable to move forward with plans to change the pension age or reduce state spending. Because the government cannot agree on a budget, investors are concerned that France is not managing its money well.

France’s financial health is a major concern for international lenders. The country’s budget deficit—the amount by which government spending exceeds its income—reached 5.1% of its total economic output in 2025. Additionally, the country's total debt is very high, standing at over 115% of its gross domestic product. Because of these numbers, some international lenders have become more careful about lending money to France. Some Japanese fund managers have even stopped lending to the country entirely. Those who continue to lend money are now asking for higher interest payments to cover the risk they are taking.

Matthew Ryan, a market strategy expert at the platform Ebury, noted that these problems are also affecting the value of the euro. He explained that the euro is performing worse than other major currencies because investors do not believe the political risk in France will go away soon. Ryan told The Guardian Business that it is unclear if the 2027 budget will be approved by parliament. He added that even if a deal is reached, it will likely include so many compromises to please different political groups that it may not actually solve the country’s long-term debt problems.

The situation remains tense as the government tries to find a path forward. With civic buildings still showing signs of damage from recent riots, the combination of social unrest and financial pressure creates a challenging environment for the French leadership. For now, the markets are watching closely to see if the government can regain control of its finances and restore confidence among international investors. Until there is a clear plan to reduce the deficit and stabilize the political situation, experts expect that the cost of borrowing will remain high, keeping pressure on the French economy.