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