France loses out in ‘flight to quality’

Could France become the next victim of the current crisis of confidence in European debt markets? In mid-July 2011 the difference between French and German borrowing costs rose to its highest since 1997. French banks also came under the spotlight for their exposure not only to Greek debt, but to Italian and Spanish as well.

However, rating agencies do not appear too concerned. Recent measures taken by President Nicolas Sarkozy’s government to bring public spending under control – pension reform, civil servant wage freezes and job cuts – have reassured some that France is on the right track.

ESO: Background information: Germany in no rush on further Greek rescue http://www.europeansources.info/record/germany-in-no-rush-on-further-greek-rescue-imf-urges-greek-debt-burden-sharing-merkel-warned-on-greek-bail-out-standoff/

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