France has returned to the spotlight for investors as concerns over public finances, weak economic growth and political uncertainty weigh on market sentiment. Government bond yields have risen sharply, with French 10-year sovereign debt now offering a significant premium over German Bunds and, unusually, yielding more than equivalent Italian government bonds.
At the same time, French equities have lagged broader eurozone markets, reflecting growing investor caution. The country’s budget deficit remains elevated at around 5.1% of GDP, while economic activity has stalled, with weak GDP growth contrasting with a more resilient euro area backdrop. Adding to these concerns, opinion polls ahead of the 2027 presidential election point to a highly fragmented political landscape.
Nevertheless, France retains important strengths, including a diversified economy and a stable A+ sovereign credit rating, suggesting that market concerns should be balanced against longer-term fundamentals
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