France now spends more than Spain to repay its debt

What was a fear becomes reality, the shift took place on Thursday. It is the revenge of the countries of southern Europe, which have made budgetary and public spending efforts.

This is a first in 18 years, since November 2006 precisely. The cost of Paris’ debt has, since Thursday September 26, been higher than that of Madrid’s debt. It is the ten-year repayment rate that is concerned, either the main repayment deadline for our public debt. There is only a small 0.2% difference, but it is significant. The French debt repayment rate is today 2.97% compared to 2.95% for Spain.

Why take Spain as a country of comparison with France? Because this country came from very far away. Further than France in terms of economic situation, like other southern states of the euro zone, such as Greece. Madrid has won the battle of inflation and is returning to growth (3% in the second quarter for Spain, while France is struggling to reach 1%). As for Germany, presented as the European economic engine, it is not in the best shape either. It is the revenge of the countries of southern Europe which made budgetary and public spending efforts, because they really had the knife to their throats after the various financial crises. It pays off today.

France was a better student than the countries of southern Europe, but perhaps not worried enough and put under pressure. Of course, there were the billions spent during the Covid crisis to support our economy, but at the same time, France continued to run wild in terms of spending to ensure the functioning of the State. The trend reversal today can be explained by the scale of our deficits, added to political instability. Since the dissolution of the National Assembly, and with the chaotic situation of this return to school, investors (those who lend us money to repay our debt) doubt our ability to resolve short-term problems.

For the moment, the Moody’s and Standard & Poor’s agencies are silent on the possible consequences of this situation on France’s rating and its ability to repay its debt. The “France signature” remains solid, but is starting to seriously crumble.