Clouds Gather Over Paris as the Spread to Germany Returns to 2012

By EC Assets · Published 30 September 2026 · Updated 30 September 2026

France now pays more to borrow than at any point since the eurozone debt crisis.

The gap between French and German 10-year yields hit 120 basis points this week, its widest since 2012.

Tomorrow the government presents its 2027 budget to the Council of Ministers. The headline figure is roughly €54 billion in savings. It matters less than a number no document contains: the votes to pass it.

Most will read the spread as a verdict on French public finances. That reading misses the point.

Deficits move slowly. Spreads like this move on politics: contested budgets, fragile majorities, governments that may not survive the autumn.

The record explains the caution. Two governments fell in no-confidence votes, in December 2024 and September 2025. The 2026 budget only passed in February, through a constitutional clause that bypassed a parliamentary vote.

This time, Prime Minister Sébastien Lecornu has reportedly ruled out that route. His minority government will have to win the vote in a divided Assembly, with debate starting in mid-October and a presidential election due next spring.

The spread is not pricing a number. It is pricing a process.

A deficit can be modelled. A vote count cannot, and markets charge a premium for what they cannot model.

That is why tomorrow's presentation settles less than it appears. The document is the easy part. Parliament is the event.

At EC Assets, we read a risk premium the way we read implied volatility: as the price of uncertainty, not a forecast of the outcome.

The clouds will not clear when the arithmetic improves. They clear when the votes are counted.