Symbolic imageFrench bond selloff weighs on euro as Le Pen unveils spending cuts
The euro fell to 1.116 dollars on Monday, its weakest since May 2025, as French borrowing costs neared 5 per cent. On Tuesday, Marine Le Pen presented a spending-cut plan.
Marine Le Pen, who leads polls ahead of next spring's presidential election, proposed on Tuesday, 6 October, a "golden rule" capping national debt at 60 per cent of GDP and cutting the deficit by 0.5 per cent a year, to be put to a referendum. She blamed President Emmanuel Macron's policies for this year's 5.4 per cent deficit and unveiled €140bn in cuts and tax changes over five years, up from €125bn. Bloomberg reports she also urged the ECB to lower borrowing costs.
Central bank warns on rates
Banque de France governor Emmanuel Moulin told the FT that France risked being "strangled by interest rates" unless it cleans up its public finances, but could win back investor confidence. According to Handelsblatt, the yield gap to German Bunds widened by 32 basis points in one week, the most since Bloomberg data began in 1990, and Spain and Italy are now drawing investor attention.
Economists dispute the savings
Allianz chief economist Ludovic Subran called the plans "voodoo economics" and said some measures would require constitutional reform. He and other economists doubt the claimed €15bn to €20bn in pension savings, since Le Pen also pledges to lower the retirement age from 62 to 60 for those who start work young.