Euro Zone Finance Ministers and ECB Urge France to Pass 2027 Budget as French Borrowing Costs Hit 25-Year Highs

Euro zone finance ministers and the European Central Bank used their monthly meeting in Luxembourg on 8 October 2026 to call on France to pass a 2027 budget, as French borrowing costs hovered at 25-year highs and bond markets showed increasing concern about the country's fiscal trajectory. France's 10-year government bond yield had risen by nearly 80 basis points (hundredths of a percentage point) since the start of September 2026, reaching close to 5 per cent, its highest level since July 2002. The surge reflects investor anxiety about France's large budget deficit and the approach of its 2027 presidential and parliamentary elections, which create political uncertainty around fiscal tightening. France acknowledged in September 2026 that its budget deficit would overshoot its own 5 per cent target. The country plans to sell a record €340 billion of bonds in 2027 to fund government spending and refinance debt accumulated during the COVID pandemic. EU Economic Commissioner Dombrovskis stressed that all member states with high deficits or debts must implement 'prudent fiscal policies', and called a sound 2027 budget essential to restoring market confidence. ECB President Christine Lagarde indicated the central bank has instruments to counter disorderly market dynamics, but officials confirmed those instruments are subject to eligibility criteria including compliance with EU fiscal rules. France's budget deficit above 5 per cent of GDP places it in an EU excessive deficit procedure (the EU's disciplinary process for countries breaching the 3 per cent of GDP ceiling), meaning it is currently ineligible for ECB bond-purchasing support. Officials speaking on condition of anonymity said debt markets were 'probably the only factor that could force' France to consolidate.

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