Will France’s Debt Woes Impact the Euro? | Presented by CME Group

France's Economic Situation - France's deficit to GDP ratio stands at 58%, exceeding the EU's 3% ceiling [1] - France's debt to GDP ratio increased from 98% in 2019 to 114% currently [2] Eurozone and Global Implications - Theoretically, rising borrowing costs in France should pressure the euro, but the euro has rallied nearly 14% against the dollar since January [3] - French 10-year yields are at 35%, matching their 2023 highs, comparable to Greece and Italy [3] - US debt to GDP ratio at 122% makes France's situation look relatively stable [4] - Global markets suggest the situation isn't yet cause for serious alarm, but a change in stance could lead to rising French yields and a declining euro [4] Factors Contributing to Deficit - France has long been known for big social safety nets, which can drive deficits [1] - Russia reduced energy supplies to France in 2022, leading to heavy government subsidies to support affected industries [2]