This reflects a reversal in the faith investors had previously held in the French economy, where borrowing costs have long been closer to that of seemingly safe nations, such as Germany.
Iain Stealey at JP Morgan Asset Management said the political instability has “reinforced our negative outlook on France”.
He has predicted that debt investors will steer clear of the nation, particularly after ratings agency S&P downgraded France’s credit score this month.
Mr Stealey said: “This lower rating and potential further deterioration in France’s budget deficit may keep other bond investors on the sidelines.”
Frank Gill at S&P said the negative market reaction may be enough to force French politicians to water down borrowing pledges.
He pointed to a similar situation in Italy six years ago: “One example of this is the Government that came into power in Italy in 2018, which promised a lot of fiscal expansionary policies. But when they came up against market pressures and the stability and growth pact rules, they quite quickly backed down.
“Whatever government comes into power in France has a lot of debt to refinance and they are going to have to do that in the market.
“Depending on what their fiscal plans are, the market will assess and judge those plans accordingly. We don’t think France has a lot of fiscal space.”
