France’s CDS has decided to say goodbye to everyone and head higher
French Credit Default Swaps, basically the cost of insuring against a default on the country’s sovereign debt, have climbed to around 84 basis points. At the same time, the French 10-year government bond yield is moving close to 5%, one of the highest levels in the Euro Area. France is increasingly starting to look like the new sick man of Europe. The latest move came after Prime Minister Sébastien Lecornu presented the 2027 budget. The objective is to bring the deficit back to around 5% of GDP, after 5.1% in 2025 and an estimated 5.4% in 2026. Without intervention, the deficit could rise to around 6.5%, mainly because of higher interest costs, pensions and other public spending. The government is therefore proposing a fiscal adjustment worth roughly €54 billion. And who is going to pay for it? Mostly taxpayers. The tax burden is expected to rise from 43.9% to 44.2% of GDP. Some benefits for pensioners would be reduced, tax exemptions would be cut, the government would tighten...