This figure, driven by inflationary pressures, had not been reached for ten years.
Long announced, the end of the era of cheap money could sound for France. Ten-year borrowing rates for treasury bonds crossed the symbolic 3% mark on Tuesday, December 27 (closing at 3.049%). An amount that the country had not known since the beginning of April 2012, in the midst of sovereign debt crisis. Paris had flirted with this figure in recent months, without ever exceeding it.
France is not the only country to see its financing conditions harden. The phenomenon affects all EU countries, as well as the United States. Latest phenomenon to explain this rise: the end of the “zero Covid” policy led by China, and the rapid reopening of its borders. Investors fear that this decision will boost the growth of the Asian giant and, with it, the rise in global demand and therefore inflation. If necessary, the central banks of the world’s main economies would be forced to continue their policy of raising key rates. If this choice makes it possible to limit inflation, it can thus break global growth. A tough trade-off, as soaring prices were just beginning to show signs of slowing down.
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A year ago, France only paid 0.12% interest rate. During this period, the world situation has changed considerably. Driven by the dynamism of the post-Covid economic recovery and then by the disruption of the global supply chain due to the war in Ukraine, inflation has made a comeback in many countries, starting with Europe.
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