France, a bad student of Europe behind Spain, Italy or Portugal

At the beginning of July, the rate of the Italian sovereign debt matched 5 years slipped under the French rate, a first since 2005. For example, The next strong signal could come from the borrowing rate at ten years. Meanwhile, the reference for international comparisons, and therefore to assess the financial reliability of a state in the eyes of the markets.

“Huge efforts” – France, bad student europe behind

The French rate at ten years, currently at 3.37 %, is at the heart of concerns as the gap is reduced with that of Italy, to 3.54 %. In addition, The “spread”. Therefore, or the gap between the two, “is reduced to sorrow skin”, underlines Mabrouk Chetouane, responsible for the market strategy of Natixis IM. In addition, It is now less than 0.2 percentage points, against 1.20 points a year ago. Similarly, The curves could cross.

This “rapprochement […] Only france, bad student europe behind translates a trend that we see in public finances, ”says Philippe Ledent, an economist expert at ING. Similarly, He believes that France will have to be “enormous efforts” to overthrow the steam. “We are at a critical moment in our history. ” said French Prime Minister François Bayrou on Tuesday, revealing his measures to redress the finances of a country subject to the “deadly danger” of “crushing by debt”.

He recalled that France’s public deficit reached 5.8 % of GDP in 2024. for public debt representing almost 114 % of GDP, the third largest in the euro zone behind Greece and Italy. According to the projections of the European Commission published in May. France should record the worst public deficit in the euro zone in 2025 and 2026.

France finds itself “bogged down in low economic growth. public finances out of control […] And a rating that tends to deteriorate, ”continues Mr. france, bad student europe behind Ledent.

The S&P agency has indeed improved last April the notation of Italy’s public debt to “BBB +”. accompanied by a “stable” perspective, when the note of French debt (AA-) has been accompanied since February with a negative perspective, which means that it could be demoted.

“Spectacular pragmatism” against political blockage

Opposite, despite the extent of the Italian debt – close to 3,000 billion euros in 2024, or 135.3 % of its GDP – Rome regained the favor of the markets. The president of the Italian council Giorgia Meloni. her government, under high pressure to reduce this colossal debt, “showed quite spectacular economic pragmatism,” notes Mabrouk Chetouane.

The Italian public deficit was more than expected in 2024, to 3.4 % of the gross domestic product (GDP). Better than anticipated tax income even made it possible to return to a surplus of public accounts in the fourth quarter of 2024. which had not happened france, bad student europe behind since 2019. What “to consider that Italy is better able to manage its debt than France”. according to Benjamin Melman, asset allocation manager at Edmond de Rothschild.

France is. it, “perceived as a country which cannot make reforms, which has already gone very far with a significant tax rate, and which is found today a little blocked”, explains to AFP Aurélien Buffault, bond manager of Delubac AM.

And since the dissolution of the National Assembly in June 2024, investors feared political blockage. They therefore require a higher yield to have French debt. a legitimate “a bonus” “because there is a risk that the country will become ungovernable,” notes Mr. Chetouane.