France risks being 'strangled by interest rates' as debt crisis drives euro to 17-month low

From the Newshound archive · first published 5 October 2026 · last updated 6 October 2026.

France's central bank governor has warned the country risks being strangled by interest rates, with 10-year borrowing costs climbing to levels last seen in 2002 and the euro falling to its lowest point against the dollar since May 2025. French public debt stands at €3.6 trillion — 119% of GDP — and the deficit is forecast to reach 5.4% this year, almost twice the EU's 3% ceiling. Prime Minister Sébastien Lecornu's minority government is pressing ahead with €54 billion in spending cuts, though the plan is meeting strong opposition from politicians with an eye on the April 2027 presidential election.

Marine Le Pen, the presidential frontrunner, has proposed submitting deficit restraint to a referendum — a suggestion that has deeply unsettled bond investors.

The euro has fallen against the dollar for four straight weeks, dragging French stocks to a six-month low and stoking fears of wider eurozone contagion.