French borrowing costs are surging and central bankers are starting to fret. Some of them, at least.

The head of the French central bank, Emmanuel Moulin, told the Financial Times that his country risks being “strangled by interest rates”.

The best solution, he made clear, was for the French government to cut costs and reduce the deficit, which, in an unchanged scenario, could reach upwards of six percent next year.

Last week, the French minority government proposed €43bn worth of cuts for 2027. But pushing them through parliament is a tall order in a divided country.

Meanwhile, investors are dumping French bonds, pushing up French government borrowing costs compared to German benchmark Bunds. This is already immensely costly to French society.

“In three weeks, we’ve lost the equivalent of €15bn a year in higher debt-servicing costs over a 10-year horizon, or almost €100bn cumulatively over 10 years!”, French economist Shahin Vallée said on social media last week.

The gap, or spread, between French and German bond yields, historically around 50 basis points (0.5 percentage points), was 109 basis points when he wrote it on Wednesday. It is now 30 points higher.

Spreads are a crucial marker for financial stability because they show how nervous investors are. The bigger the spread, the higher the perceived risk.

And France’s parabolic bond spread is already bringing back unwelcome memories of the eurozone crisis in November 2011, when the spread reached 200 basis points.

Bypass parliament?

The question is what to do about it, and who is best positioned to act. The French government could bypass a parliamentary vote or push through the budget by ordinance, under articles 49.3 and 47 of the constitution, respectively.

This article continues, but the full version is available only to EUobserver.com subscribers. Visit account.euobserver.com/membership