(Dec 19): France could face a market backlash if plans to repair the public finances fail to bring its deficit within 5% of economic output next year, the country’s central bank chief said. “Beyond a 5% deficit, France would clearly put itself in danger,” Francois Villeroy de Galhau said in an interview with Le Figaro. The government has warned that portions of finance bills so far approved would only bring the deficit to 5.3% of economic output in 2026, down from 5.4% this year. The yield premium on France’s 10-year bonds compared to German peers is about 70 basis points, after rising to over 89 in October. Villeroy said markets can suddenly shift if there is a sequence of events including a clash with the European Union over fiscal policy, more ratings downgrades or the withdrawal of hedge funds.

Source: The Edge Markets December 19, 2025 09:25 UTC