France is in crisis but bond markets leave other governments at risk of meltdown, too

"Sebastien Lecornu's abrupt resignation as the French prime minister on Monday after less than a month in the role marked the latest clash between France's stretched public finances and its polarised politics. Lecornu was the latest prime minister to try and fail to cobble together a package of spending cuts and tax rises that would pass muster in a parliament without a clear majority, and contain mounting bond market pressures."

"Government bond yields, essentially the interest rate on a country's debt, have been creeping up in many major economies in recent weeks and months, amid concerns about tax and spending pressures. Yields on longer-term Japanese debt jumped on Monday, with the likely new prime minister, Sanae Takaichi, expected to ramp up spending despite Tokyo's 250% of gross domestic product (GDP) debt pile amid consumer frustration over rising prices."

"In the UK the putative Labour leadership contender Andy Burnham was ridiculed by colleagues last week for suggesting the government should be less in hock to the bond markets, when the Treasury is paying 110bn a year in interest to investors, and yields have repeatedly shifted in response to policy moves as well as global pressures. Rachel Reeves has repeatedly insisted her fiscal rules, which frustrate some Labour colleagues, are just the consequence of the need to maintain the confidence of the bond markets."

Sebastien Lecornu resigned after less than a month as French prime minister after failing to assemble a package of spending cuts and tax rises that could pass a fragmented parliament and calm bond-market pressures. President Emmanuel Macron faces the choice of appointing another premier or stepping down himself. Government bond yields have risen across major economies amid concerns about tax and spending. Japanese yields jumped as a likely new prime minister is expected to increase spending despite extreme debt levels. UK debate highlights the tension between fiscal rules and the need to maintain bond-market confidence.

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