Developments over the past year have put France’s public debt on a steeper upward path, with the debt ratio now likely to rise from 113% of GDP last year to around 126% by 2030. We see little chance of a sustained fiscal consolidation in the coming years and expect spreads on French bonds to rise further. Moreover, we think the ECB is unlikely to intervene unless the spread on French over German government bonds rises very rapidly and probably to more than 200bp.
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