Since July 2023, investors have started lending to Italy at lower rates than to France, marking a significant shift in the Eurozone financial market.
Changes in Bond Interest Rates
For the first time since 2005, the interest rate on five-year French bonds (2.67%) has surpassed that of Italy (2.65%). This change signals a growing distrust among investors towards the French economy. Economy Minister Éric Lombard specified that "France borrows at higher rates than Italy."
Reasons for the Deteriorating Situation
The increase in risk premiums is due to the high level of public spending in France, which constitutes 57% of GDP—ten points higher than the EU average. Additionally, France has not undertaken significant structural reforms in recent years, which further exacerbates investor dissatisfaction.
Implications and Prospects for France
If this trend continues, it may lead to serious implications for the stability of France's financial system and negatively impact foreign investments and local investor confidence. Investors are beginning to seek alternative assets like Bitcoin, highlighting the growing distrust in traditional sovereign debt.
France finds itself in a vulnerable position and must either restore confidence through economic reforms or face deteriorating financial credibility within the European economic landscape.
