France's debt crisis could push Italy into recession by 2027, warns Oxford Economics

Oxford Economics warns that a severe bond-market shock in France could push both France and Italy into recession in 2027, though a debt crisis remains outside its central forecast. French 10-year bond yields hovered near 4.9% on Monday following weekend protests. France's public debt stands at 119% of GDP, with interest payments forecast to rise by almost €12 billion to €91 billion in 2027. Italy is particularly vulnerable due to slow growth, high debt, and investment sensitive to tighter financial conditions. Under the severe scenario, France's spread would reach 400 basis points, with yields hitting 7% in 2027. The ECB could support countries other than France through its Transmission Protection Instrument, though President Lagarde said solutions must first come from France.