Euro zone ministers tell France to pass 2027 budget to calm markets

On October 8, 2026, Euro zone finance ministers and the European Central Bank urged France to pass a 2027 budget to stabilize bond markets, as borrowing costs for the country remain at a 25-year high. The surge in French borrowing costs was discussed during the monthly talks in Luxembourg. France's 10-year bond yield has risen nearly 80 basis points since the start of September, reaching its highest level since July 2002.

EU Economic Commissioner Peter Dombrovskis emphasized the importance of prudent fiscal policies in reassuring markets. The French government revealed in September that its budget deficit would exceed the 5% target for the year. Despite implementing tightening measures, investors remain skeptical due to the fragmented parliament and upcoming elections in April and May 2027.

France intends to sell a record €340 billion in bonds in 2027 to fund the government and refinance COVID-era debt. However, no euro zone institution is prepared to intervene to help France lower its borrowing costs. The European Central Bank can buy bonds from a euro zone country on the secondary market if their prices rise unjustifiably, but France is not eligible for ECB assistance due to its budget deficit exceeding the 3% threshold and failing to meet the agreed fiscal consolidation path with the EU.