France now pays a wider premium over Germany than Spain, Italy or Greece

At 4.448% on the French 10-year, with 94.5 basis points of that sitting over Germany ^[10][11], the German 10-year is at about 3.503% ^[2]. Roughly four-fifths of what Paris pays to borrow is the euro rate, and roughly a fifth is the French premium ^[3].

The ecology ministry's damage estimate can be used to back out a GDP figure. Put this summer's heat waves, wildfires and drought at 10 billion to 15 billion euros, or 0.3% to 0.5% of GDP ^[8], and that implies French output of about 3.0 trillion to 3.3 trillion euros ^[4]. Debt at 117.6% of that is roughly 3.5 trillion to 3.9 trillion euros ^[13][5]. February's low 3% range to 4.448% is a move of about 1.2 to 1.4 percentage points ^[6]. On the full stock, once every bond has rolled at the new level, that is 44 billion to 56 billion euros of extra interest a year ^[7]. Three to six times the summer's storm damage, and annually instead of once ^[8]. Only maturing paper reprices, so the money goes out over years.

The forecast the finance ministry publishes is a tenth of a point above the one the statistics institute publishes ^[1]. "This year is an acute crisis in which four different types of shocks have overlapped," Lescure said in remarks reported by Reuters and other outlets on the 12th ^[7][17]. He named domestic political uncertainty, surging energy prices, extreme summer weather and rising borrowing costs ^[6]. The energy part dates from the war in Iran that broke out in late February ^[4].

The deficit plan asked for very little to begin with. Against 5.1% of GDP last year, the 5% target for this year was a tenth of a point of consolidation ^[14][9], and Lescure said "5% is no longer an option" ^[16]. Analysts had already treated the 5% goal as effectively unattainable, according to the report of his remarks ^[15].

France carries 28.7 points of GDP more public debt than the eurozone average ^[13][10]. April's presidential election ^[9] is where the view gets tested. I would expect the premium over Germany to stay wide while the deficit target is being rewritten. If instead it compresses on the election result alone, with no change to the deficit path, then the market was pricing politics, and the interest figures above overstate the durable cost.