France’s financial markets came under pressure on Monday, October 19, as violent protests intensified political uncertainty and heightened investor concerns about the country’s public finances.
The yield on France’s 10-year government bonds rose by 10 basis points to 4.89%, widening the gap with German borrowing costs towards levels last seen 14 years ago. The two-year bond yield climbed eight basis points to 3.63%, while the 30-year yield reached 5.42%.
Bond yields rise when prices fall, meaning the sell-off could increase the cost of government borrowing as France struggles to control its budget deficit and public debt.
The unrest followed weeks of demonstrations over the cost of living and deteriorating conditions in schools. Authorities reported nearly 2,400 arrests by Sunday, while clashes with police and damage to public and commercial property added to concerns about political stability.
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The market reaction extended beyond government bonds. The euro fell to a 17-month low against the pound, with sterling reaching €1.188, while the euro weakened 0.4% against the dollar to $1.1197. France’s CAC 40 stock index dropped 1.2%, and shares in major banks Société Générale and BNP Paribas fell by more than 2%.
France’s debt-to-GDP ratio stood at 115.6% in 2025, while its budget deficit reached 5.1% of economic output. Political pressure could complicate proposed spending cuts aimed at reducing the deficit ahead of the 2027 election.
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