Borrowing costs for the French government have surged beyond those of Italy in an unprecedented shift for the eurozone's debt markets. The 10 year yield spread for France over German bonds climbed 5 basis points to 124 basis points on Sept 30, the first time that risk measure has surpassed 120 basis points since 2012. French debt is currently under pressure from accelerating inflation and political uncertainty, with France now yielding 22 basis points more than Italian debt.

The increase in risk comes as investors prepare for potential political upheaval next year. France will issue a record €340 billion in bonds in 2027 to manage its finances, while the government projects a budget deficit of 5.4% of GDP for the current year.