France's Borrowing Premium More Than Doubles as Protests Persist

France is facing two pressures at once: street protests over the cost of living and a bond market that is demanding more to lend to the government. About 146,000 people rallied across the country on Saturday, the Interior Ministry said, while the extra interest France pays over Germany has more than doubled since June, according to DW.

The two stories are linked, DW reported. Investors are pricing in high debt, political instability, large deficits and the recent unrest, while the government is promising money for schools and universities that, DW says, the state does not have.

What happened at Saturday's protests?

Al Jazeera reported that it was the fourth consecutive weekend of demonstrations. The Interior Ministry counted 146,000 participants nationwide, including 46,000 in Paris. Unions gave higher figures: 250,000 nationwide and 75,000 in the capital. Days earlier, an estimated 575,000 people joined a union-organized rally.

About 70,000 security personnel were deployed. Interior Minister Laurent Nunez warned that authorities would be "ready and waiting" for anyone rioting or looting. Police used tear gas in Paris and Lyon, and in Paris they said a group of 200 people attacked officers who were arresting a man accused of setting fire to a rubbish bin, according to AFP as cited by Al Jazeera.

The protests began in September over poor conditions and a lack of resources at high schools, then widened to cover worsening living standards. Students still lead the movement, but people of all ages take part.

Why are France's borrowing costs rising?

DW reported that France's public debt stands at around 120% of gross domestic product, compared with roughly 65% for Germany. Germany holds the top AAA credit rating. France is rated AA, A+ or Aa3 depending on the agency, and several agencies have given it a negative outlook.

The gap between French and German 10-year bond yields, known as the spread, is now nearly 1.6 percentage points. DW said that is the highest since the financial crisis and that France last paid a comparable premium at the end of 2011, during the eurozone debt crisis. Economist Friedrich Heinemann of the ZEW institute called the spread a "fever gauge" for bond markets.

How large is the interest bill?

According to DW, France is expected to pay more than €79 billion in interest on its public debt in 2026, a figure that includes social security funds and local authorities. It is projected to pass €91 billion in 2027 and could reach between €125 billion and €132 billion by 2030. The central government's own interest bill is estimated at €62.6 billion by the Agence France Tresor.

France must also refinance large amounts of bonds issued when interest rates were at historic lows, while its big deficit forces it to borrow more. The last time France balanced its budget was 1974.

What are politicians proposing?

The government plans €4 billion in low-interest loans to renovate schools by 2030 and a further €1 billion for universities by 2029, DW reported. The presidential election is due in April, and Al Jazeera said polls put Marine Le Pen of the National Rally first, followed by Jean-Luc Melenchon of France Unbowed.

DW said Le Pen wants to restore a retirement age of 62 while promising €140 billion in savings. Melenchon, who presented his program to about 17,000 supporters on Saturday, promised to do the opposite of President Emmanuel Macron and to fund social and ecological needs from billions of euros that already exist, Al Jazeera reported. Heinemann described both parties' messages as economic fairy tales that avoid painful cuts.

Why does it matter for people in France?

Heinemann told DW that if the spread climbs too far, financing conditions tighten and anyone in France who needs a loan pays more. He said banks could then get into trouble and the crisis could escalate. A larger share of the national budget would also go to debt service.

Political researcher Landry Charrier of the University of Bonn told DW he does not expect the spending habit to end soon. He cited the national statistics agency INSEE, which found that 56% of the population receives more in benefits and services than it pays in taxes and contributions, so most people have a stake in the status quo. He added that the euro has removed an older warning signal, currency devaluation, which once made imbalances felt through prices and purchasing power.

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Around Prague, based on reporting by DW, Al Jazeera