France at risk of defaulting on debt

What began as a student protest against the deteriorating conditions in public schools evolved into a more heterogeneous movement that cries out against the cost of living, the lack of opportunities for young people, and the amount of pensions.

President Emmanuel Macron’s government was overwhelmed, and curfews have been imposed in some of the country’s main cities to end the looting and vandalism that had taken over since last weekend.

But an even more destructive fire may be catching fire in the financial markets, where a growing distrust of French bonds has been detected in recent weeks.

France, like many other countries, issues these and other debt securities to finance its current spending in exchange for offering investors who buy them a return in the future.

But since the beginning of September 2026, France’s risk premium (the extra cost it must pay investors to finance itself in the debt markets compared to Germany, considered the most solvent country in the eurozone) has increased substantially, reflecting growing doubts about the sustainability of French debt.

In other words, markets are beginning to doubt that the French Republic can meet its debt payments, both principal and interest, and may end up defaulting, as happened, for example, to Argentina in 2001.