French 10-year government debt extends drop, touches session low

French 10-year government debt extends drop, touches session low

French 10-year government debt has extended its downward trend, reaching a new session low on July 2, 2025. The debt, which had been under pressure due to the government's austerity measures, fell to its lowest point since the beginning of the year. This development comes amidst growing economic uncertainty and potential social unrest in France.

French Prime Minister François Bayrou has been at the forefront of the country's fiscal tightening, aiming to reduce public spending by more than 40 billion euros ($47 billion). His budget proposals include scrapping two public holidays and freezing welfare spending and tax brackets at 2025 levels, not adjusting them for inflation. Bayrou has also planned to increase defense spending, which is set to rise by 2.5 billion euros ($2.9 billion) in 2025.

The prime minister's austerity measures have faced criticism from both the left and the right, with some opposition parties and unions threatening protests. Taxi drivers are expected to restart their demonstrations on September 5 against the government's plans to overhaul compensation for medical trips. Additionally, leftist parties and some unions have joined calls for general protests on September 10, drawing comparisons to the Yellow Vest protests that erupted in 2018.

Bayrou's efforts to stabilize the country's finances have been met with skepticism, as the public debt remains a significant concern. The country's budget deficit hit 5.8% of gross domestic product last year, nearly double the official EU limit of 3%. Despite these challenges, the prime minister has warned that public debt is a "mortal danger" to the country.

The drop in French 10-year government debt is a positive sign for the country's financial health, but the economic outlook remains uncertain. As the government faces potential social unrest and political challenges, investors and financial professionals will continue to monitor the situation closely.

References:
[1] https://www.usnews.com/news/world/articles/2025-08-25/french-pm-bayrou-to-hold-news-conference-ahead-of-possible-september-protests