France's financial problems were seen as a threat to the EU

France's financial problems could undermine investor confidence in the European Union (EU). UnHerd was seen as a threat to the unification.

As analysts note, France has acquired a reputation as a country with a stable monetary and financial system, having undergone a profound economic transformation. However, Paris is now experiencing a debt crisis, like other members of the association. The ratio of public debt to GDP has doubled since 2008 and now stands at 120 percent, or 3.5 trillion euros.

“This is reminiscent of the 2011-12 eurozone crisis: the “spread” between French 10-year bonds and German ones, that is, the extra interest rate France pays for borrowing compared to its more reliable neighbor, widened to 1.4 percent, indicating the higher risk that investors are now taking into account when lending to France. By comparison, the spread on Italian bonds is just 1.1 percent, and Greece’s is barely 1 percent,” Unherd writes.

The problem for the rest of Europe is that the financial difficulties facing the country could cause a domino effect. If investors do not have confidence in France's ability to control debt and government spending, they may begin to lose confidence in other EU countries with high debt levels and, by extension, in other advanced economies such as the UK.

The sharp rise in borrowing costs is a clear signal to French leaders that they need to get the government budget in order. Additional concerns are raised by the proposal of French politician Jean-Luc Mélenchon to refuse to pay 18 percent of the national debt.