Political turmoil in France sends euro tumbling and borrowing costs soaring as manufacturing crisis deepens
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French borrowing costs spiked and the euro fell yesterday as the Paris government teetered on the brink of collapse and bleak figures revealed a further downturn for Europe’s manufacturing sector. The market turbulence came as Right-wing and Left-wing parties said they would back a no-confidence motion against prime minister Michel Barnier in the coming days.
Barnier made a dramatic appeal to French MPs urging them not to back the move –which would be the first time a French government has been brought down by a no-confidence vote since 1962. ‘We are at a moment of truth,’ he said. ‘The French will not forgive us for putting the interests of individuals before the future of the country.’.
Yields on French ten-year bonds – the return demanded by investors for lending to the government – spiked, briefly overtaking those issued by Greece. The narrowing of the gap between the two countries’ borrowing costs illustrates how, while Greece has fought back from its chaotic debt crisis more than a decade ago, France – Europe’s second biggest economy – has sunk into the mire.
Under fire: French Right-wing and Left-wing parties said they would back a no-confidence motion against prime minister Michel Barnier (pictured) in the coming days. At the same time, the gap between French bonds and those issued by Germany has increased.
