French Bond Risk Premium Tops 100 Basis Points Over Germany for First Time Since 2012

France's 10-year bond spread over Germany exceeded 100 basis points on September 18, 2026, reaching 104 bps for the first time since the 2012 euro zone debt crisis, as investors demand greater compensation for the country's stretched finances. The spread has doubled since a snap 2024 election produced a fractured parliament, complicating deficit reduction. France aims to cut its budget deficit from 5.4% of output to 5% in 2027 via €54 billion in spending cuts, but opposition parties may challenge the measures. Rising energy prices tied to the Middle East conflict add further growth risk. Debt-servicing costs are now France's largest budget expense, running €4.5 billion above forecast this year and projected €10 billion higher in 2027. Analysts at Societe Generale have not ruled out a move to 120 bps.