France is moving to the center of concern in Europe’s bond market as sovereign debt selling continues to spread. With the yield spread between French and German government bonds back near levels seen more than a decade ago, worries about another eurozone debt crisis have resurfaced. StoneX analyst Vincent Deluard said France now checks all six boxes in a traditional debt-crisis framework.
Borrowing costs are rising across major markets
Pressure on France is building at a time when long-term yields are moving higher across developed economies. The U.S. 10-year Treasury yield rose above 5.2% in late September, reaching its highest level since 2007. UK government bond yields also moved above 5.2% in early September. In Europe, the European Central Bank raised rates by 25 basis points in June 2026, the first increase in nearly three years.
When borrowing costs rise together across major economies, countries with weaker fiscal positions are often hit first. That is the market backdrop France is facing now.
High tax burden leaves little room for more revenue
On the revenue side, tax receipts account for 25.2% of GDP in the United States, the lowest among large developed economies cited in the report. The figure stands at 35.3% in the UK and 43.9% in France.
Deluard’s comparison is that both the U.S. and France carry heavy debt burdens, but the U.S. still has room to raise taxes if politicians choose to reduce deficits. In France, taxpayers are already carrying a much heavier load, making it harder for lawmakers to ask voters to pay more.
The approaching 2027 presidential election adds to that constraint, with little political appetite to put tax hikes on the table before the vote.
French-German bond spread has widened to 2011-2012 levels
As selling pressure in the bond market continues, the gap between French and German government bond yields has kept widening. That spread reflects the extra risk premium investors demand to hold French debt. The last time it reached a similar scale was in 2011 and 2012.
Some market participants have started to describe the move as a sequel to the euro debt crisis, but with France replacing Greece as the focal point.
Deluard’s six-point checklist for a debt crisis
According to Deluard, France currently meets each of the following conditions:
- The government carries a large stock of debt.
- Debt holders are mainly foreign investors, leaving the state unable to compel additional buying.
- The currency used to price the debt is not under national control, because the euro is issued by the European Central Bank.
- Tax revenue growth is lagging the rise in borrowing costs.
- Tax revenue growth is also failing to keep pace with spending growth.
- The government does not have a spending-cut or revenue-raising plan that markets find credible.
The third point stands out. The United States and the United Kingdom also have large debt burdens, but both retain control over their own currencies. France, by contrast, gave up that monetary sovereignty after joining the euro system. If bond investors lose patience, Paris has fewer tools available.
A core eurozone economy is under pressure this time
Deluard’s comparison with 2011-2012 is that the countries at the center of the earlier crisis, including Greece and other southern European states, were smaller economies. This time, the pressure is falling on France, a core member of the euro area, which gives the issue broader significance.
BlockTempo also referenced other recent market developments in its report, including the ECB’s return to rate hikes, comments from a former Morgan Stanley chief strategist on U.S. yields at 5%, and trader bets that the Federal Reserve could raise rates four times next year. Together, those moves point to continued strain across global bond markets.