Let’s not be France

The WSJ reports:

Last week, a slow-burning selloff in France’s government bond market took an alarming turn as it spread across the continent, reviving memories of the eurozone debt crisis last decade. France’s 10-year borrowing cost has risen toward 5%, the highest level since 2002.

The more you borrow, the bigger the risk you become, and the higher the interest rates go.

With presidential elections approaching in the spring, leading candidates to replace President Emmanuel Macron, who is term limited, are showering voters with promises to expand government spending.

Sounds familiar? Two parties in NZ are promising over $200 billion each of extra spending.

The difference between paying 1% and 5% on your borrowing is, of course, massive. In NZ we were paying 3% in 2017, and we are now paying just over 5%.