The interest rate gap between France and Germany, known as the spread, has grown to about 140 basis points, up from less than 90 basis points a month ago, according to Bank of France Governor Emmanuel Moulin. He explained this increase is due to France’s larger budget deficit compared to other countries in the eurozone and political uncertainty following a recent vote on the national budget. Experts are raising concerns that this could lead to a debt crisis in France, which might spread to other eurozone countries, especially if no clear political majority emerges after the upcoming legislative elections following the 2027 presidential vote. Robin Brooks, an economist from the Brookings Institution, said France is already in a debt crisis and expects the European Central Bank (ECB) to take action. However, Moulin clarified that the ECB’s role is to control inflation, not to fix budgetary problems. The ECB is not currently considering intervention, according to economist Anthony Morlet-Lavidalie from Rexecode, because the interest rate gap is not yet alarming enough. He added that the ECB wants to avoid sending the message that it might step in. Patrick Artus from Ossiam mentioned several possibilities, including the ECB using the Transmission Protection Instrument (TPI) to support the French bond market by buying large quantities of bonds on the secondary market. However, France is not eligible for the TPI, as it is currently under an excessive deficit procedure. The TPI is meant for countries without major structural public finance issues and who "would suffer from unjustified and disorderly financial turbulence," according to a Senate report. Carsten Brzeski from ING suggested that a significant rise in interest rate differentials across multiple eurozone countries would be a stronger case for using the TPI. However, the ECB might first halt its quantitative tightening and reinvest in maturing bonds, which could help lower borrowing costs across the eurozone. The most extreme scenario would involve French political and budgetary instability causing a sharp drop in demand for French bonds, potentially leading to the activation of the Outright Monetary Transaction (OMT) program. This would require a serious budget adjustment plan, including major structural reforms. However, Barclays warned that these tools were designed for smaller countries, and the amount needed to buy back France’s debt would be enormous, making France "too big to fail" but also "too big to be saved."