Hello,

According to the International Monetary Fund (IMF), global public debt could reach 117% of GDP in the next two years, a level not seen since the end of World War II, and unprecedented during peacetime.

 

This can be readily observed in France, where the debt trajectory has seen credit ratings fall and bond yields rise in recent years. In Q1 2025, France’s public debt had grown 6% in just the previous 12 months. Prime Minister François Bayrou has referred to it as public enemy number one, leaving the nation “on a cliff edge” of bankruptcy. This was a fate that France narrowly escaped during the European Debt Crisis, while nations such as Italy required a bailout.

 

Today, the spread between France and Italy’s long term bond yields has been nearly diminished entirely. At the shorter end of the curve, French yields have already risen past those of Greece and Portugal, nations with unenviable past reputations for fiscal profligacy. This means that France will need to refinance its current debt pile at a significantly higher cost than it was first borrowed. The French government has proposed radical measures like the removal of two public holidays to help trim the annual deficit; however, it remains to be seen if such moves assuage the market.

 

As always, if you wish to discuss anything in further detail, please do get in touch.