France’s premium to borrow over Germany reached 104 basis points on 10-year bonds, surpassing one percentage point for the first time since the 2012 euro zone debt crisis. French long-term yields briefly moved into the high-4.5% range, their highest since 2008, as fiscal concerns compounded a wider bond selloff driven by higher energy prices and expectations of further European Central Bank rate increases. The spread has doubled since the 2024 snap election produced a fractured parliament and has widened by 40 basis points since June. The government has proposed €54 billion in spending cuts to reduce the deficit from 5.4% of GDP this year to 5% next year, but weaker growth means France is expected to miss its current-year target and opposition resistance has raised the risk of political instability. Higher yields are increasing debt-servicing costs, already the country’s largest budget expenditure item, while France now pays a higher premium than Italy despite Italy’s heavier debt burden and lower credit ratings. Societe Generale has not ruled out a move to 120 basis points if political risks intensify, although some investors see the current yield premium as sufficient compensation for sovereign risk.