Euro zone ministers tell France to pass 2027 budget to calm markets
TLT•Euro zone finance ministers and the European Central Bank urged France to pass a 2027 budget, as its 10-year bond yield rose nearly 80 basis points since September and reached its highest level since July 2002, just below 5%. Officials said France does not qualify for ECB bond-buying support because it is in an EU excessive deficit procedure.
1. Budget urged to reassure markets
Euro zone finance ministers and the European Central Bank told France to pass a 2027 budget to calm bond markets as French borrowing costs hovered near 25-year highs. EU Economic Commissioner Valdis Dombrovskis said a sound budget for next year would help provide predictability and credibility and reassure markets.
2. Yields and borrowing plans
France’s 10-year bond yield had climbed nearly 80 basis points since the start of September, reaching its highest level since July 2002, just short of 5%. France said in September its deficit would exceed the government’s 5% target this year, and plans to sell a record €340 billion of bonds in 2027 to fund the government and refinance COVID-era debt.
3. ECB support unavailable
Officials said no euro zone institution was ready to help lower France’s borrowing costs. ECB President Christine Lagarde said the central bank had instruments to counter disorderly market dynamics, but France is in an EU excessive deficit procedure and does not meet the stated eligibility criteria for ECB bond purchases.
