As France runs out of cash to borrow, politics could shift

France's incumbent President and UMP ruling party's candidate for the 2012 presidential election, Nicolas Sarkozy speaks during a campaign meeting on April 18, 2012 in the French northern city of Arras.

Supporter listen to France's incumbent President and UMP ruling party's candidate for the 2012 presidential election, Nicolas Sarkozy during a campain meeting on April 18, 2012 in the French northern city of Arras.

Supporters attend a rally for French President and right-wing ruling party, Union for a Popular Movement (UMP) candidate for the French 2012 presidential election Nicolas Sarkozy at Place de la Concorde on April 15, 2012 in Paris, France. President Sarkozy and challenger Socialist Francois Hollande held giant campaign rallies a week before the first round of voting as polls showed Hollande widening his lead by another two points.

Jeremy Hobson: France will try to borrow a lot more money today. But the low borrowing costs the country has seen ever since the European Central Bank handed out a trillion dollars in emergency loans into the system are no longer a sure thing -- that money may be running out.

And as Marketplace's Stephen Beard reports from London, France's future leadership is also uncertain.


Stephen Beard: The French government has seen its borrowing costs -- or bond yields -- go up in recent days. Investors are worrying about politics. There’s the first round of the presidential election this Sunday.

And the current conservative President Nicholas Sarkozy has fallen way behind his socialist rival in the opinion polls, as broker Bill Blain told the BBC.

Bill Blain: Markets are beginning to get a little bit nervous about what a change in the French government is going to mean. I suspect that we’re likely to see French government bond yields rise in the next couple of weeks.

He says investors fear that if the socialist candidate wins the election, France won't take the necessary steps to cut its budget deficit.

And there's another worry: Germany has backed Sarkozy to win. If he doesn’t, a big rift could open up in the very heart of Europe.

In London, I’m Stephen Beard for Marketplace.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

Supporter listen to France's incumbent President and UMP ruling party's candidate for the 2012 presidential election, Nicolas Sarkozy during a campain meeting on April 18, 2012 in the French northern city of Arras.

Supporters attend a rally for French President and right-wing ruling party, Union for a Popular Movement (UMP) candidate for the French 2012 presidential election Nicolas Sarkozy at Place de la Concorde on April 15, 2012 in Paris, France. President Sarkozy and challenger Socialist Francois Hollande held giant campaign rallies a week before the first round of voting as polls showed Hollande widening his lead by another two points.

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