French PM Lecornu warns interest rate hikes will add €10B to debt costs

France is staring down a fiscal squeeze that would make even the most seasoned budget hawks wince. Prime Minister Sébastien Lecornu has warned that rising interest rates will pile an additional €10 billion onto the country’s debt servicing costs, a sum large enough to fund entire government ministries. In a letter to his cabinet dated September 15, 2026, Lecornu instructed ministers to hold non-defense state spending at 2026 levels when drafting the 2027 budget. The message was blunt: every extra euro going to bondholders is one euro less for schools, hospitals, and public services. The numbers behind the pain France’s benchmark 10-year OAT yields have climbed to 4.5%, a peak not reached since 2008. The country’s total public debt now sits at roughly €3.5 trillion, or about 117% of GDP. Annual interest payments alone are projected to hit €65 billion, a figure that already eclipses what France spends on defense or education individually. And that was before the additional €10 billion Lecornu is now flagging. If realized, total debt servicing costs would approach €75 billion annually, making it one of the single largest line items in the French budget. What’s driving yields higher Th...