Le Déluge: On the brink of a French fiscal crisis?

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02 October 2026 Global macro, Fixed income

“Persistent deficits and rising debt mean the French fiscal situation has become increasingly unsustainable, and risks associated with the 2027 presidential election are becoming more acute.”

France is moving closer to a crisis: French government bond spreads are at their widest in almost 15 years driven by high inflation, rising global yields, and ongoing fiscal challenges, among other factors.
Polls indicate a dramatic political shift: Surveys suggest Marine Le Pen is the most likely to win the presidential election in April 2027. Addressing the fiscal situation has not historically been a high priority for Le Pen.
French assets will likely stay under pressure though default risk remains very low in our view: Long-term investors may find current spread levels attractive. However, historical comparisons suggest spreads could widen further, offering potential opportunities within dynamically managed active portfolios.