The euro sank to its lowest level against the dollar since May 2025 over Spain’s snap elections added to mounting fiscal and political worries across the region. Investors have grown increasingly alarmed over the eurozone’s debt burden, moribund economic growth, and persistent inflation. France is a particular cause for concern: The spread on 10-year French bond yields above German ones — the European benchmark — briefly surged to more than 150 basis points due to concerns about Paris’ huge debt pile and political uncertainty, with far-right and far-left parties ascendant ahead of presidential elections next year.
Previous efforts to corral France’s public finances with spending cuts have, however, been “economically and socially disastrous,” a leading economist wrote in Le Monde, arguing that Paris should prioritize “fiscal responsibility, not austerity.”
