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Wednesday, November 16, 2011

'Alarm bells should be ringing for France': Fears for Eurozone's second-largest economy as borrowing costs soar - 16th Nov 2011

Eurozone bond markets suffered from a mass sell-off yesterday - with previously healthy economies finding themselves sucked into the debt crisis.

The yield on French government bonds climbed to 3.63 per cent. With the German equivalent at just 1.75 per cent, the difference between what it costs Paris and Berlin to borrow is at its highest level since the euro was established in 1999.

And an influential report added to market nerves with a claim that the French economy is the 17-member eurozone's second biggest but only the 13th healthiest.

The Lisbon Council think tank and Germany's Berenberg Bank rates France one rank above Italy, and one below Spain.

'Alarm bells should be ringing for France,' said Holger Schmieding, Berenberg's chief economist.

Those bells might also ring, however, for the triple-A rated countries Austria, Finland and the Netherlands, which also saw bond yields worryingly.

France saw its bond yields continue to climb this morning before falling back to 3.67 per cent.

The French economy is rated 13th out of the 17 in the eurozone for its overall health by The Lisbon Council think tank and Germany's Berenberg Bank. Read More