France's Borrowing Costs Near Greek Levels as Political Risks Loom

France's borrowing costs have effectively matched those of Greece for the first time, highlighting growing concerns over France's creditworthiness amidst political instability. Michel Barnier's government is on the verge of collapse due to opposition to a budget involving significant tax hikes and spending cuts, raising investor fears of potential financial setbacks.

France's borrowing costs effectively equaled those of Greece on Thursday, a signal of shifting perceptions of euro zone members' creditworthiness amid political strife. Michel Barnier's government stands on shaky ground as opposition parties, both far-right and leftist, threaten its dissolution over a contentious budget plan.

Lenders are apprehensive that a government breakdown could derail efforts to mitigate borrowing, risking a period of financial uncertainty. This political instability comes against the backdrop of long-standing fiscal challenges; France's debt levels have persisted in rising, contrasting with improvements in once-crisis-stricken countries like Greece.

The bond market's response underscores the precariousness of France's economic situation, with Friday's awaited ratings update from S&P Global Ratings poised to impact investor sentiment further. The situation draws stark comparisons to France's eurozone neighbors, who have curbed debt levels, enhancing their market appeal.

(With inputs from agencies.)