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Global Macro Research

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

Le Déluge:

On the brink of a French fiscal crisis?

October 02, 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 heading for 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 for France, among other factors.
  • Polls indicate a dramatic political shift: Surveys suggest Marine Le Pen is increasingly likely to win the presidential election in April 2027. Addressing the fiscal situation does not appear to be a priority for Le Pen.
  • French assets will likely stay under pressure: Historical comparisons suggest spreads could widen further, offering a rationale for underweight positions in French assets, though there are scenarios in which the situation could improve.

 

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